PROGRESS  <§iuf  PLENTY 


Progress  (S,  Plenty^ 


cADVOCATES    THE    SINGLE    TAX 
A  SCIENTIFIC  CURRENCY 
A     MINIMUM     WAGE     TO 
ABOLISH  POVERTY  £ 
UNEMPLOYMENT 


JAMES  S.  PATON 


BOSTON 

THE  CHRISTOPHER  PRESS 
1913 


CONTENTS 

CHAPTER   I 
Introductory 9 

CHAPTER    II 

The  Cause  of  Low  Wages 17 

High  rent  and  high  interest  are  both  causes  of 
low  wage  ,  Competition  fixes  the  rate  of 
wages,  bv.t  is  not  the  cause  of  low  wages. 
Monopoo  of  land  and  capital  the  cause  of 
low  wages,  as  it  leaves  the  laborers  helpless, 
and  forces  them  to  accept  whatever  wages 
are  offered. 

CHAPTER   III 

Henry  George's  Laws  of  Distribution 31 

Mr.  George's  theory  that  high  rent  lowers  both 
interest  and  wages  admitted,  but  his  theory 
that  high  interest  is  a  cause  of  high  wages 
is  denied  and  disproved.  George  claimed  that 
laws  of  distribution  were  laws  of  proportion; 
his  failure  to  discover  the  law  of  wages 
caused  by  not  sticking  to  this  rule.  Two  rea- 
sons why  wages  are  low,  George  discovered 
one.  Supply  and  demand,  or  Competition,  the 
true  law  of  distribution. 

271907 


CHAPTER    IV 

Henry  George's  Remedy 55 

Private  property  in  land  may  be  defended  upon 
the  same  grounds  as  chattel  slavery  but  upon 
no  other.  George's  remedy  for  an  unjust 
system  of  distribution  is  to  substitute  rent 
for  taxes.  Rent  and  interest  almost  identical. 
Money  reform  and  land  reform  related. 

CHAPTER   V 

Money   Reform * . .  60 

National  Citizens'  League  for  a  Reformed  Bank- 
ing system.  Resolutions  adopted  by  National 
Board  of  Trade.  A  National  Reserve  needed, 
but  money  should  be  issued  when  required 
by  the  Government.  More  money  required 
whenever  interest  rises,  and  less  when  inter- 
est falls. 

CHAPTER    VI 

Some  Principles  of  Money 65 

Teachings  of  Alexander  Del  Mar.  Essence  of 
money  limitation.  Volume  of  currency  should 
be  kept  at  constant  ratio  to  volume  of  ex- 
changes. 

CHAPTER    VII 

An  Automatic  Currency 71 

Can  be  secured  by  the  Government  supplying 
the  demand  for  money  at  a  fixed  rate  of 
interest.  Private  parties  will  prevent  infla- 
tion by  lending  money  on  better  terms  than 
the  Government  when  there  is  enough  in 
circulation,  and  Government  loans  will  only 
be  called  for  when  more  money  is  really 
needed. 


CHAPTER   VIII 

Government  Control  of  the  Currency 78 

An  article  on  Banking  Reform  criticized. 

CHAPTER  IX 

The  Multiple  Standard 94 

CHAPTER   X 

Direct  Legislation 100 

Quotations  from  "Equity." 

CHAPTER   XI 

Socialist  Political  Economy 110 

Principles  of  Socialism,  Civil  Liberty,  and  Social 
Justice.  No  detailed  plan  generally  endorsed. 
If  Socialism  comes  it  must  come  by  install- 
ments, as  necessity  for  reform  arises.  Mis- 
use of  word  "value"  cause  of  confusion. 

CHAPTER   XII 

Reformers  Must  Unite  to  Win 123 

Must  have  a  sound  economic  platform  before 
it  is  possible  to  unite. 

CHAPTER   XIII 
Conclusion   .  130 


CHAPTER   I 

INTRODUCTORY 

My  reason  for  writing  this  book  is,  that  I 
am  not  satisfied  with  any  book  that  has  yet 
been  written  on  the  subject  of  Political  Econ- 
omy. Political  Economy  is  a  science  in  the 
making,  and  although  it  has  made  great  pro- 
gress in  this  generation,  it  is  still  far  from 
perfect.  I  have  studied  Henry  George's  writ- 
ings more  than  any  other,  and  accept  his  teach- 
ings in  regard  to  land,  but  not  in  regard  to 
the  relations  between  labor  and  capital.  I 
accept  the  teachings  of  Alexander  Del  Mar 
on  the  science  of  Money;  and  the  teaching 
of  Wm.  Blissard  on  the  Ethics  of  Interest. 
I  do  not  agree  with  writers  who  think  there  is 
an  irreconcilable  difference  between  individu- 
alists and  Socialists.  We  are  all  individuals, 
and  as  such  have  certain  rights.  We  are  all 
members  of  society,  and  as  such  have  certain 
duties.  We  should  all  be  interested  in  main- 
taining our  individual  liberties  where  they  do 
not  conflict  with  the  welfare  of  society,  and 
we  should  all  consider  the  welfare  of  society 
of  the  first  importance. 


10  PROGRESS     AND     PLENTY 

The  interests  of  the  workers  are  identical. 
They  want  conditions  that  will  give  high  wages 
and  employment  for  all.  The  only  obstacle 
that  keeps  Socialists  and  Individualists  apart 
is  ignorance,  and  the  ignorance  is  not  all  on 
one  side,  neither  is  the  knowledge. 

I  see  some  truths  that  have  been  overlooked 
by  reformers  and  hope  to  present  them  in  such 
a  way  that  reformers  who  are  now  opposing 
each  other  may  be  brought  to  work  in  har- 
mony. It  is  my  purpose  to  review  the  teach- 
ings of  the  different  schools  of  Political  Econ- 
omy in  regard  to  the  distribution  of  wealth, 
accept  truth,  and  reject  error,  no  matter  how 
many  endorse  it.  As  I  agree  with  Henry 
George  more  than  with  any  other  writer  I  will 
follow  his  argument  in  regard  to  the  distribu- 
tion of  wealth.  He  saw  that  previous  writers 
failed  to  state  the  laws  of  distribution  scien- 
tifically. He  saw  also  that  the  laws  should 
harmonize,  and  came  so  near  discovering  them 
that  when  his  mistakes  are  seen  it  is  very  easy 
to  see  what  the  true  law  is. 

The  writers  he  criticises  considered  Rent 
and  Interest  so  exactly  similar  in  their  nature 
that  they  included  land  with  capital,  and  rent 
with  interest.  George  saw  that  considering 
land  as  capital  was  a  mistake  that  was  sure 
to  lead  to  confusion,  and  in  trying  to  correct 
this  mistake  he  went  to  the  other  extreme  and 
tried  to  prove  that  rent  and  interest  affected 


PROGRESS     AND     PLENTY  11 

wages  differently;  that  the  effect  of  high  rent 
was  to  lower  wages,  but  that  the  effect  of  high 
interest  on  wages  was  to  raise  them.  This 
theory  is  so  contrary  to  common  knowledge 
that  few,  even  of  his  followers,  accept  it.  It 
was  this  theory  that  prevented  Henry  George 
from  seeing  that  labor  needed  a  remedy  to 
prevent  capitalists  from  oppressing  laborers 
as  well  as  a  remedy  to  prevent  the  oppression 
of  laborers  by  landlords.  I  purpose  pointing 
out  where  George's  reasoning  was  false,  and 
correcting  his  mistakes ;  then  I  will  show  that 
there  is  a  remedy  for  the  oppressions  of  capi- 
tal similar  to  George's  remedy  for  landlordism. 

The  true  reformer  owes  allegiance  to  no 
man  or  party.  He  follows  the  truth  wherever 
it  leads,  and  is  loyal  to  it  alone.  The  great 
trouble  with  reform  movements  is  that  so 
many  think  they  must  stick  to  their  party,  right 
or  wrong,  and  allow  some  one  who  knows  more 
than  they  do  to  do  their  thinking.  No  man  is 
perfect,  yet  all  know  something.  You  may 
see  the  mistake  of  a  person  who  knows  more 
than  you  do,  and  you  may  be  able  to  correct  it. 

I  once  heard  a  Socialist  lecturer  say  that 
Socialism  would  come  by  instalments,  and  he 
was  glad  of  it,  as  in  that  way  we  would  get 
rid  of  the  rubbish.  Now  we  are  all  ready  for 
Socialism  minus  the  rubbish,  the  trouble  is 
that  we  cannot  all  agree  as  to  what  is  rubbish 
and  what  is  useful.  We  want  to  learn  to 


12  PROGRESS     AND     PLENTY 

distinguish  truth  from  rubbish.  We  want  a 
science  of  Political  Economy  free  from  rub- 
bish. There  is  nothing  true  in  Socialism  that 
will  not  harmonize  with  what  is  true  in  any 
other  reform  movement;  and  when  we  learn 
the  true  principles  of  Government  we  will  soon 
learn  to  apply  them. 

Henry  George  tried  his  best  to  prevent  his 
followers  from  following  him  blindly.  He 
accepted  nothing  on  authority  himself,  and 
always  gave  his  reasons  for  his  belief,  but  most 
men  are  inclined  to  follow  a  leader  and  think 
they  are  bound  to  defend  all  his  teachings, 
right  or  wrong;  and  George  has  many  follow- 
ers of  that  kind.  It  is  of  more  importance 
to  understand  the  true  principles  of  Political 
Economy  than  to  uphold  any  man's  opinions. 

Although  I  have  criticized  Mr.  George  more 
than  any  other  reformer,  I  admire  his  char- 
acter more  than  that  of  any  other  writer;  and 
consider  his  solution  of  the  land  problem  the 
best  offered.  I  intend  to  show  that  the  prin- 
ciples taught  by  him  have  a  wider  application 
than  he  gave  them;  that  as  other  Political 
Economists  teach,  rent  and  interest  are  almost 
identical  in  their  nature,  and  that  to  apply  the 
same  principles  to  money  reform  which  George 
applied  to  land  reform,  will  give  us  a  money 
system  as  far  superior  to  any  system  ever 
tried  as  George's  land  policy  is  superior  to 
any  other  system  of  land  tenure.  Socialism, 


PROGRESS     AND     PLENTY  13 

today,  is  not  what  it  was  twenty  years  ago. 
Socialists  are  progressive,  and  although  their 
plan  may  still  be  far  from  perfect,  their  pro- 
gram for  legislative  action  in  the  near  future 
is  pretty  good.  It  may  resemble  the  first 
machine  invented  for  some  particular  purpose 
in  being  too  complicated,  and  it  is  my  pur- 
pose to  show  how  a  simpler  plan  will  give  bet- 
ter results. 

Socialists  call  our  present  system  of  pro- 
duction the  competitive  system.  No  socialist 
writer,  as  far  as  I  know,  has  followed  the 
methods  of  other  economic  writers,  and  tried 
to  discover  the  natural  laws  that  govern  the 
distribution  of  wealth;  and  many  of  their  pro- 
posed reforms  do  not  harmonize  with  natural 
laws. 

According  to  orthodox  political  economy, 
there  are  three  factors  in  production,  land, 
labor,  and  capital.  These  are  reduced  to  two, 
by  calling  land  capital. 

Henry  George  starts  in  with  the  same  three 
factors,  but  before  he  gets  through  he  says 
there  are  really  only  two  factors,  that:  "In 
truth  the  primary  division  of  wealth  is  dual, 
not  tripartite.  Capital  is  but  a  form  of  labor, 
and  its  distinction  from  labor  is  in  reality  but 
a  subdivision,  just  as  the  division  of  labor  into 
skilled  and  unskilled  would  be." 

Now  I  purpose  to  show  that  there  are  three 
factors  in  production,  labor,  the  active  factor, 


14  PROGRESS     AND     PLENTY 

and  land  and  capital,  the  passive  factors. 
That  the  natural  order  is  for  the  laborer  to 
apply  himself  to  the  production  of  wealth  by 
using  land  and  the  tools  and  other  capital 
produced  by  labor  to  assist  him  in  producing 
more  wealth.  Where  the  laborer  has  access 
to  free  land,  and  has  capital  of  his  own,  he 
gets  all  he  produces;  but  if  he  must  give  a 
part  of  his  produce  to  a  landlord  for  the  use 
of  land,  or  to  a  capitalist  for  the  use  of  capi- 
tal in  any  form,  his  wages  must  be  lowered 
by  as  much  as  the  landlord  or  capitalist  receive. 
In  a  case  where  the  capitalist  enables  him  to 
produce  more  wealth  his  wages  will  not  depend 
upon  what  he  produces,  but  upon  what  he  has 
left  after  paying  interest,  just  as  they  depend 
upon  what  is  left  after  paying  rent,  where  he 
has  rent  to  pay. 

Mr.  George  attaches  great  importance  to 
the  fact  that  capital  is  produced  by  labor,  and 
argues  from  that  fact  that  the  relations  be- 
tween labor  and  capital  must  be  harmonious. 
I  do  not  consider  his  argument  sound.  It  is 
of  no  consequence  where  capital  comes  from, 
as  long  as  the  laborer  does  not  own  it,  and  has 
to  pay  a  capitalist  for  its  use.  The  majority 
of  mankind  are  helpless,  because  they  are 
deprived  of  their  right  to  the  use  of  the  earth; 
and  also  because  they  are  deprived  of  such  a 
large  portion  of  what  they  produce  by  those 
who  own  capital.  Land  being  monopolized 


PROGRESS     AND     PLENTY  15 

by  a  part  of  society  the  rest  must  compete  for 
its  use.  Competition  for  land  fixes  the  share 
of  the  landlord.  Other  forms  of  wealth  that 
are  required  to  assist  in  the  production  of 
wealth  are  also  monopolized  by  a  part  of  the 
people.  The  necessities  of  the  rest  force  them 
to  compete  for  capital.  The  landlord  gets  a 
part  of  what  they  produce  for  allowing  them 
to  use  suitable  land,  whether  farm,  mine,  or 
factory  site.  The  capitalist  also  gets  a  part 
for  allowing  them  to  use  tools,  machinery, 
stocks  of  goods,  etc.  What  each  gets  depends 
upon  the  intensity  of  competiton,  or  upon  sup- 
ply and  demand.  Competition  is  the  law  of 
distribution.  It  is  natural  for  selfish  men  to 
compete,  and  evolution  has  not  carried  us 
beyond  that  stage  yet.  We  cannot  in  the  near 
future  abolish  competition;  but  we  can  con- 
trol conditions,  so  that  competition  instead  of 
enriching  the  few  will  benefit  the  masses  and 
raise  wages.  I  intend  in  the  following  pages 
to  show  how  it  may  be  done.  As  to  the  pro- 
duction of  wealth,  the  problem  is  being  solved. 
Poverty  and  low  wages  are  not  caused  by  our 
inability  to  produce  sufficient  for  all,  but  by 
unjust  laws  that  prevent  the  mass  of  man- 
kind from  supplying  their  wants  by  their  labor, 
without  paying  a  toll  for  the  privilege  in  the 
shape  of  rent  and  interest;  or  accepting  low 
wages.  As  that  is  the  case  I  will  not  take  up 
the  question  of  production,  but  begin  with  the 


16  PROGRESS     AND     PLENTY 

law  of  distribution,  and  after  reviewing  what 
economic  writers  teach  upon  that  subject,  I 
will  proceed  to  discuss  remedies. 


CHAPTER    II 

THE  CAUSE  OF  LOW  WAGES 

Why  are  wages  low?  One  third  of  a  cen- 
tury has  passed  since  Henry  George  at- 
tempted to  answer  that  question  by  the  meth- 
ods of  Political  Economy,  and  discover  why 
laborers  do  not  receive  a  just  share  of  the 
wealth  which  they  produce;  and  why  their 
share  of  the  product  does  not  increase  as  their 
labor  becomes  more  effective  through  im- 
proved methods.  His  explanation  was:  That 
wages  do  not  increase  with  increase  in  pro- 
ductive power,  because  the  price  of  land  and 
rent  does;  and  the  landlord  receives  the  whole 
increase. 

The  fact  that  the  rate  of  interest  has  fallen 
of  late  years  seemed  to  him  to  prove  that  the 
capitalist  was  getting  less.  The  share  of  the 
capitalist  in  the  production  of  wealth  does  not 
depend  upon  the  rate  of  interest  entirely; 
unless  he  is  simply  a  money  lender.  There 
are  other  ways  by  which  capitalists  manage 
to  get  a  large  portion  of  what  labor  produces, 
that  do  not  depend  upon  the  rate  of  interest, 
and  I  think  we  will  find  that  Mr.  George  did 


18  PROGRESS     AND     PLENTY 

not  attach  as  much  importance  to  these  as  he 
should. 

As  land,  labor,  and  capital  are  the  only  fac- 
tors in  production,  the  whole  product  must  be 
divided  between  these  three  factors.  The 
term  rent  covers  the  whole  of  the  dividend 
that  goes  to  the  landowner.  The  term  wages 
covers  the  whole  share  of  the  laborer.  But 
the  term  Interest  does  not — as  commonly  used 
—cover  the  whole  share  of  the  capitalist.  As 
Henry  George  used  it  to  denote  the  share  of 
the  capitalist,  and  sometimes  used  the  word 
in  its  narrow  sense,  it  is  not  surprising  that 
he  came  to  the  conclusion  that  the  capitalist 
does  not  receive  too  large  a  share  of  the  pro- 
duct. 

A  low  rate  of  interest  indicates  that  plenty 
of  money  is  in  circulation  and  offered  to  loan. 
A  capitalist  may  borrow  money,  pay  rent, 
wages,  and  interest,  and  make  a  profit.  Some 
will  contend  that  the  entrepreneur  is  really  a 
laborer  and  that  what  he  makes  he  earns  by 
his  labor  in  superintending  and  managing  the 
enterprise.  While  that  is  at  least  partly  true, 
it  is  also  true  that  it  is  to  his  interest  to  keep 
wages  low,  and  that  one  reason  why  wages 
are  low  is  that  such  men  get  so  much.  The 
profits  of  the  entrepreneur  depend  upon  the 
price  he  receives  for  the  goods  he  produced, 
and  not  upon  the  rate  of  interest  on  money. 
I  mean  that  the  price  he  gets  for  the  goods 


PROGRESS     AND     PLENTY  19 

is  the  main  thing.  Of  course  his  profits  do 
depend  upon  getting  low  rates  on  rent,  wages, 
and  interest,  for  he  trys  to  make  a  profit  on 
all  three  factors. 

Henry  George  claimed  that  there  was  no 
real  conflict  between  labor  and  capital,  and 
that  capital  was  the  friend  of  labor.    Now  that 
is  strictly  true,  and  it  is  just  as  true  that  there 
is  no  conflict  between  land  and  labor,  or  be- 
tween land  and  capital  and  that  land  is  the 
friend  of  labor.     When  a  laborer  owns  what 
land  and  capital  he  requires,  he  receives  the 
whole  product  of  his  labor  and  whether  he  gets 
it  as  wages,  rent,  or  interest  is  not  a  matter  of 
any  consequence  to  him,  as  he  gets  it  all  in 
either  case.     But  when  he  has  to  accept  low 
wages  on  account  of  high  rent,  or  high  interest, 
the  case  is  quite  different.    Although  there  is 
no  conflict  between  labor  and  capital,  there  are 
often  conflicts  between  laborers  and  capitalists. 
When  a  capitalist  hires  laborers  his  profits  de- 
pend partly  upon  the  wages  he  pays  them,  and 
partly  upon  the  rent  he  pays  for  the  land  they 
use.     He  generally  owns  the  land  as  well  as 
the  capital,  and  in  that  case  there  is  no  conflict 
between  landlord  and  capitalist,  for  as  they 
are  combined  in  one  person  or  corporation, 
they  get  the  whole  product  except  wages  and 
consequently  landlord  and  capitalist  are  gen- 
erally combined  to  keep  wages  low,  and  rent 
and  profits  high.    When  rent,  wages,  and  inter- 


20  PROGRESS     AND     PLENTY 

est  go  to  three  different  persons  each  one  is  op- 
posed to  the  other  two.  If  a  man  owns  capital, 
and  pays  rent  and  wages,  he  wants  low  rent 
and  low  wages.  If  he  owns  more  capital  and 
land  than  he  can  use  himself,  he  is  only  inter- 
ested in  keeping  wages  low;  for  as  he  gets  all 
except  wages,  it  does  not  matter  to  him 
whether  he  gets  it  as  a  landowner  or  as  a  cap- 
italist. Nor  does  it  matter  to  the  laborer 
whether  the  portion  of  his  product  taken  from 
him  goes  to  a  landowner,  or  to  a  capitalist. 
The  capitalist  stands  in  the  same  relation  to  the 
laborer  as  the  landlord,  and  Mr.  George's 
theory  that  capital  is  the  friend  of  labor  is  only 
true  when  the  laborer  either  owns  the  capital 
or  does  not  have  to  pay  too  much  for  its  use. 
He  may  pay  too  much  for  its  use,  either  by 
paying  high  interest  on  borrowed  capital,  or 
by  accepting  low  wages. 

There  is  seldom  any  conflict  between  land- 
lord and  capitalist,  because  a  capitalist  may 
become  a  landlord  by  buying  land,  or  a  land- 
lord may  become  a  capitalist,  either  by  selling 
part  of  his  land  or  by  saving  part  of  his  rent, 
and  they  are  generally  combined  in  the  same 
person.  No  matter  how  efficient  a  laborer  may 
be,  he  is  utterly  helpless  and  dependent,  with- 
out the  other  two  factors.  If  he  has  enough 
land  and  capital  to  apply  his  own  labor  effect- 
ively, in  the  calling  of  his  choice,  he  is  inde- 
pendent. If  he  must  look  to  others  to  supply 


PROGRESS     AND     PLENTY  21 

him  with  land  and  capital,  he  is  dependent, 
more  or  less,  according  to  the  terms  he  can 
make  with  landlord  and  capitalist.  If  his  ser- 
vices are  in  great  demand,  that  is  if  a  great 
many  who  are  able  to  pay  for  them,  require 
them,  and  if  there  are  no  other  laborers  offer- 
ing to  perform  the  labor  he  can  do,  his  wages 
will  be  high.  If,  on  the  other  hand,  there  are 
a  great  many  more  laborers  offering  to  per- 
form the  services  he  can  render  than  there  are 
employers  able  and  willing  to  pay  for  them, 
then  his  wages  will  be  very  low,  and  he  will  be 
often  unemployed.  It  is  competition  that  fixes 
the  rate  of  wages. 

The  plan  adopted  by  organized  laborers  to 
raise  wages  is  to  refuse  to  work  unless  they 
can  secure  what  they  consider  a  fair  wage.  It 
is  the  plan  adopted  by  all  laborers,  for  that 
matter.  Employers  combine  to  resist  the  de- 
mands of  laborers  for  higher  wages,  and  often 
to  offer  less.  A  better  plan  is  needed  for  sev- 
eral reasons :  In  the  first  place,  it  is  to  be  hoped 
that  the  conflict  between  capitalist  and  laborer 
over  wages  will  be  permanently  settled ;  and  it 
never  can  be  in  that  way.  Then  it  is  an  un- 
equal contest,  for  it  is  not  possible  for  laborers 
to  refuse  to  work  until  the  employers  are  com- 
pelled to  give  in.  They  may  cause  the  capital- 
ists to  lose  considerable  wealth  and  the  capital- 
ists sometimes  give  in  rather  than  to  suffer 
loss  and  inconvenience;  but  the  laborers  are 


22  PROGRESS     AND     PLENTY 

soon  facing  starvation  and  can  never  hope  to 
bring  the  capitalists  to  that  point.  When  the 
laborers  win  in  a  strike  it  is  not  only  at  the 
expense  of  all  their  savings,  and  suffering  and 
poverty  besides,  but  the  financial  loss  they 
cause  their  employers  to  sustain,  is  an  indirect 
injury  to  themselves.  Wealth  is  required  to 
produce  wealth,  or  they  would  not  have  to 
work  for  wealthy  people,  and  at  the  end  of  a 
long  strike  the  employers  are  not  able  to  em- 
ploy as  many  laborers  as  they  were  at  the  be- 
ginning. 

Under  present  conditions,  laborers  are  often 
forced  to  strike  for  self-preservation.  It  is 
time  that  conditions  were  changed  so  that 
strikes  will  be  unnecessary.  The  remedy  is  a 
problem  that  should  interest  the  whole  peo- 
ple, as  all  suffer  more  or  less  indirectly  from 
strikes.  Competition  is  considered  by  many 
to  be  the  cause  of  low  wages,  and  many  wish  to 
abolish  it.  It  will  be  well  to  analyze  competi- 
tion and  see  how  it  works,  and  find  out  whether 
it  is  really  the  cause  of  low  wages  or  not.  All 
men  must  consume  more  or  less  wealth  every 
day  of  their  lives,  and  most  of  them  want  more 
of  it  than  they  can  get.  Laborers  are  seldom 
satisfied  with  their  wages,  landlords  always 
want  higher  rent,  and  capitalists  more  profits 
on  their  investments.  A  person  who  has  no< 
land  or  capital  of  his  own,  is  generally  com- 
pelled to  offer  his  services  to  others  for  wages.,, 


PROGRESS     AND     PLENTY  23 

and  tries  to  get  as  high  wages  as  possible.  But 
he  must  sooner  or  later  accept  the  terms  of- 
fered. 

One  who  has  land  and  capital  can  engage  in 
some  industry  on  his  own  account.  If  he  has 
more  land  than  he  requires  himself,  he  can 
rent  the  surplus  to  others  or  he  can  hire  others 
to  help  him  to  use  his  land.  In  either  case  he 
keeps  as  much  as  possible  for  himself.  The 
laborer  cannot  remain  idle  very  long,  and  if 
his  wages  are  very  low,  he  must  have  steady 
employment. 

A  capitalist  or  a  landlord  may  sometimes 
require  assistance  very  much,  but  never  to  the 
same  extent  that  a  laborer  requires  work.  One 
of  the  principal  functions  of  Governments  in 
former  times  was  to  keep  the  slaves  or  laborers 
in  subordination,  and  it  is  still  so.  The  rich 
live  on  the  wealth  produced  by  the  poor,  and 
try  to  keep  them  in  a  helpless  condition,  know- 
ing that  if  the  laborers  were  free  it  would  be 
impossible  to  appropriate  so  much  of  their 
earnings.  Three  things  are  necessary  to  our 
present  mode  of  production  and  distribution 
to  enable  the  rich  to  live  on  the  earnings  of  the 
workers.  The  workers  must  be  kept  from 
using  land  on  easy  terms,  and  they  must  be 
kept  from  accumulating  capital,  and  they  must 
be  forced  to  compete.  Under  favorable  condi- 
tions competition  raises  wages,  but  when  the 
laborer  has  nothing  to  fall  back  on, — when  he 


24  PROGRESS     AND     PLENTY 

must  either  accept  the  wages  offered,  or  starve, 
then  competition  may  bring  wages  down  to  a 
bare  subsistence.  In  a  new  country,  with 
plenty  of  rich  land,  and  opportunities  for  the 
investment  of  capital,  but  with  few  laborers, 
land  being  plentiful  is  cheap.  Immigration 
sets  in,  laborers  with  a  little  capital  can  employ 
themselves,  and  those  wishing  to  hire  laborers 
find  them  scarce.  They  compete  for  laborers 
and  wages  rise.  Laborers  ask  for  higher  wages 
and  get  them,  as  some  of  the  employers  can- 
not find  as  many  laborers  as  they  wish  to  hire, 
and  can  only  get  them  by  paying  higher  wages, 
than  other  employers.  Those  who  are  engaged 
in  the  most  profitable  industries,  or  own  the 
best  land,  can  afford  to  pay  the  highest  wages, 
and  by  competing  can  secure  the  help  they  re- 
quire, while  those  on  less  productive  land  or 
engaged  in  less  profitable  occupations  are  short 
of  help. 

Capital  is  also  in  demand,  and  interest  high 
for  the  same  reason  that  wages  are  high;  it  is 
scarce,  and  competition  for  its  use  forces  inter- 
est up.  Where  such  conditions  exist  wealth  is 
fairly  divided.  The  land  owners,  although 
paying  high  wages  and  interest  are  not  com- 
pelled to  pay  too  much,  for  they  need  not  un- 
dertake more  than  they  can  do  themselves. 

Conditions  gradually  change  with  the  in- 
crease of  population.  There  is  soon  a  man  for 
every  job,  and  sometimes  men  who  cannot  find 


PROGRESS     AND     PLENTY  25 

employment  at  high  wages.  Employers  find 
that  they  can  offer  less  wages  and  still  secure 
all  the  help  they  require.  As  time  goes  on  the 
condition  of  the  wage  earners  gradually 
changes  until  they  are  forced  to  accept  very 
low  wages.  They  even  take  the  places  of  those 
who  are  employed  by  offering  to  work  for  less. 
There  is  nothing  in  this  examination  to  show 
that  competition  is  to  blame  for  the  low  wages 
of  the  latter  period,  as  competition  had  a  fa- 
vorable effect  upon  wages  at  the  start  and 
would  have  continued  to  keep  wages  high  if 
conditions  had  remained  favorable.  The  prin- 
cipal change  that  affects  wages  as  a  new  coun- 
try settles  up,  is  the  rise  in  the  price  of  land. 
While  land  is  free  or  cheap  laborers  are  con- 
tinually leaving  employment  for  wages,  to 
work  for  themselves,  and  landowners  get  very 
little  of  the  product  of  labor  for  their  share, 
unless  they  contribute  by  working  themselves. 
But  when  population  increases  and  land  goes 
up  in  price,  fewer  laborers  leave  the  labor  mar- 
ket, and  landowners  receive  a  large  share  of 
what  is  produced,  as  rent  for  their  land,  with- 
out contributing  any  labor  themselves.  The 
wage  workers  of  the  early  days  are  now  mostly 
landlords  and  capitalists — in  a  small  way  at 
least — but  the  laborer  of  late  years  has  small 
chance  to  become  either,  though  a  few  always 
manage  to  gain  financial  success  either  by  ex- 
ceptional ability  or  favorable  circumstances. 


26  PROGRESS     AND     PLENTY 

The  wealth  per  capita  is  now  much  greater 
than  in  the  days  of  the  first  settlers,  but  it  is 
not  so  evenly  divided.  Landlord  and  capital- 
ist both  continue  to  prosper.  The  two  are 
generally  combined  in  the  same  person  so  their 
relations  are  harmonious.  The  rate  of  interest 
has  fallen,  but  the  capitalist  has  more  money 
invested,  and  what  with  interest  on  the  larger 
amount,  profits  on  monopolies  of  one  kind  or 
another,  he  and  the  landlord  get  a  far  larger 
portion  of  the  wealth  produced  than  formerly. 
Land  and  capital  being  interchangeable  keeps 
landlord  and  capitalist  on  an  equal  footing; 
as  wages  fall  the  laborer  comes  to  be  looked 
upon  as  an  inferior.  Deprive  a  wealthy  man 
of  both  land  and  capital  and  he  is  still  on  an 
equal  footing  with  the  laborer.  Land  and  cap- 
ital both  give  him  an  advantage  over  the  la- 
borer. In  the  struggle  for  high  wages,  the 
laborer  can  only  obtain  them  by  refusing  to 
accept  low  wages,  and  he  cannot  refuse  low 
wages  very  long,  especially  if  there  are  many 
unemployed  in  his  neighborhood. 

This  study  of  competition  has  shown  that 
under  favorable  circumstances  competition 
will  raise  wages  but  that  the  laborer  is  not 
upon  an  equal  footing  with  the  landlord  and 
capitalist,  and  that  he  can  only  secure  high 
wages  when  there  is  a  demand  for  more  labor- 
ers than  can  be  secured  at  low  wages. 

To  abolish  competition  when  conditions  are 


PROGRESS     AND     PLENTY  27 

favorable  to  laborers  would  prevent  wages 
from  rising.  To  abolish  competition  when 
conditions  were  unfavorable  would  prevent 
wages  from  falling  and  those  who  had  employ- 
ment would  keep  their  jobs,  but  it  would  not 
help  the  unemployed.  It  is  not  competition 
that  causes  low  wages,  but  wrong  conditions. 
Low  wages  are  caused  partly — principally,  I 
should  say — by  the  monopoly  of  the  land. 
There  are  other  things  that  stand  in  the  way 
of  high  wages  for  all.  In  his  book  "The 
Economic  and  Social  Problem,"  Michael  Flur- 
schiem  states  the  matter  very  nicely;  he  says: 
"The  great  social  problem  is:  First,  the  ques- 
tion why  a  growing  number  of  workers  have 
to  go  without  necessaries  and  luxuries,  though 
only  too  anxious  to  produce  them  for  each 
other;  and,  Second,  what  are  the  obstacles 
interposed  against  the  exertion  of  their  pro- 
ductive power?"  He  shows  that  want  is  not 
owing  to  the  inability  of  the  workers  to  pro- 
duce an  abundant  supply  for  all;  but  to  the 
unjust  division  of  the  wealth  produced,  caused 
by  the  monopoly  of  the  land  and  capital.  He 
uses  an  illustration  to  explain  the  problem 
something  like  this:  Crusoe  has  to  work  hard 
for  a  bare  living  on  his  Island  (for  he  claims 
the  whole  island)  until  Friday  arrives,  then 
his  lot  is  somewhat  improved,  as  Friday  has 
to  give  him  a  portion  of  what  he  produces  as 
rent.  More  laborers  arrive  and  Crusoe  lives 


28  PROGRESS     AND     PLENTY 

in  luxury  and  idleness,  but  the  workers  only 
get  a  bare  living.  A  ship  arrives  and  Crusoe 
supplies  his  tenants  with  improved  tools. 
Then  they  all  live  in  luxury  for  a  time.  After 
a  while  Crusoe  raises  the  rent  and  also  charges 
high  interest  for  the  use  of  his  capital.  Then 
the  tenants  only  get  a  bare  living  and  Crusoe 
cannot  consume  his  share.  The  consequence 
is  overproduction,  laborers  are  discharged  and 
there  is  soon  hunger  and  destitution  on  the 
island  although  there  is  plenty  for  all,  if  high 
wages  had  only  divided  the  wealth  so  that  it 
could  be  consumed. 

Those  who  live  on  rent  and  interest  cannot 
consume  their  share  of  the  wealth  produced, 
and  those  who  produce  it  do  not  get  their  just 
share;  the  consequence  is  overproduction  ac- 
companied by  hard  times  and  destitution,  an 
utterly  unnatural  state  of  affairs.  It  does  not 
matter  whether  the  laborers  on  the  island  are 
slaves,  as  Flurscheim's  illustration  supposes 
them  to  be,  or  free  laborers,  as  I  have  stated 
the  case;  nor  does  it  matter  whether  they 
compete  or  not,  as  long  as  Crusoe  has  a  mon- 
opoly of  the  land  and  capital.  The  remedy 
for  the  evils  on  the  island  is  for  Crusoe  to 
reduce  rents,  and  interest,  and  raise  wages. 
I  think  it  will  be  as  well  to  carry  this  illus- 
tration a  little  farther  while  I  am  at  it,  and 
illustrate  the  remedies  I  advocate. 

We  will  suppose  that   Crusoe  is   a  good 


PROGRESS     AND     PLENTY  29 

fellow  and  wants  to  have  a  prosperous  island. 
We  will  suppose  that  he  got  a  copy  of  Pro- 
gress and  Poverty  and  decided  to  use  all  his 
rent  for  the  public  good,  instead  of  for  his 
own  private  gain,  and  do  away  with  taxes. 
The  island  was  soon  very  prosperous,  but 
Crusoe  had  a  lot  of  interest  on  hand  and  the 
thought  came  to  him  that  he  might  use  it  in 
the  same  way  as  he  used  the  rent.  Popula- 
tion was  increasing  and  money  was  needed  to 
carry  on  commerce.  Crusoe  issued  notes  and 
loaned  them  to  all  who  had  good  security,  at 
4%  interest.  After  some  time  no  one  on  the 
island  would  think  of  paying  more  than  four 
per  cent  for  a  loan  of  money,  for  they  knew 
that  they  could  always  get  it  from  Crusoe  at 
that  rate.  Those  who  had  money  to  lend  soon 
found  that  if  they  wanted  to  keep  their  money 
invested  they  would  have  to  offer  it  on  just  a 
little  better  terms  than  Crusoe.  Then  some 
of  the  Islanders  came  to  Crusoe  and  wanted 
him  to  lend  them  money  for  less  than  4%,  but 
he  said:  No,  if  I  lower  the  rate  of  interest 
more  money  will  be  called  for  and  our  cur- 
rency will  depreciate  in  value.  Whenever 
you  can  borrow  money  from  private  parties 
at  less  than  my  rate,  do  so ;  but  whenever  you 
cannot,  come  to  me  and  I  will  let  you  have  all 
you  need.  In  this  way  we  will  always  have 
as  much  money  as  we  require  on  our  island, 
and  we  will  never  have  any  more,  for  when- 


30  PROGRESS     AND     PLENTY 

ever  there  is  a  surplus  in  circulation  it  can  be 
borrowed  at  less  than  the  rate  I  charge  and 
will  be  taken  up  quickly  to  return  my  4% 
loans.  After  that  there  was  never  a  money 
panic  on  the  island,  wages  were  always  high 
and  no  country  in  the  world  had  such  good 
schools  or  so  many  public  works. 


CHAPTER    III 

HENRY  GEORGE'S  LAWS  OF  DISTRIBUTION 

Mr.  George  was  an  earnest  seeker  after  the 
truth.  He  really  wanted  to  discover  why 
wages  do  not  rise  with  the  increase  of  wealth, 
and  he  always  stated  his  reasons  for  his  be- 
lief plainly  and  fearlessly. 

He  differs  from  all  other  writers  on  political 
economy  in  his  theory  of  the  laws  of  distribu- 
tion. He  maintains  that  as  land,  labor,  and 
capital  are  the  three  factors  in  production, 
land  cannot  be  considered  as  capital,  but  must 
be  kept  separate,  otherwise  there  are  but  two 
factors;  and  if  we  want  to  discover  what  de- 
cides the  share  of  each  in  the  wealth  produced 
we  must  keep  each  factor  by  itself.  I  agree 
with  Mr.  George  in  that,  and  in  my  attempt 
to  state  the  laws  I  have  kept  the  three  factors 
separate.  Mr.  George  claims  that  wages  fall 
as  rent  rises;  that  interest  (the  share  of  the 
capitalist  in  production)  also  falls  as  rent  rises, 
and  that  wages  and  interest  always  rise  and 
fall  together.  Other  writers  hold  that :  Wages 
fall  as  interest  and  profits  rise.  This  seems 
to  directly  antagonize  Mr.  George's  theory; 
but  as  they  include  land  with  capital,  they 


82  PROGRESS     AND     PLENTY 

must  include  rent  with  interest ;  so  their  state- 
ment really  means  that:  Wages  fall  as  rent 
and  interest  rise.  That  is  undoubtedly  the 
truth;  for  if  the  combined  shares  of  landlord 
and  capitalist  rise  there  must  be  a  smaller 
share  left  for  the  laborer.  But  where  the 
three  shares  are  kept  separate  it  is  not  true 
that  any  two  shares  always  rise  and  fall  to- 
gether. An  increase  in  the  share  of  any  one 
of  the  factors  leaves  less  to  be  divided  between 
the  other  two;  and  a  fall  in  the  share  of  one 
leaves  more  for  the  other  two  to  divide.  Mr. 
George  saw  this  clearly  at  the  beginning  of 
his  investigation,  for  he  says:  "The  laws  of 
the  distribution  of  wealth  are  obviously  laws 
of  proportion,  and  must  be  so  related  to  each 
other  that  any  two  being  given  the  third  may 
be  inferred.  For  to  say  that  one  of  the  three 
parts  of  a  whole  is  increased  or  decreased,  is 
to  say  that  one  or  both  of  the  other  parts  is 
reversely  decreased  or  increased.  If  Tom, 
Dick  and  Harry  are  partners  in  business,  the 
agreement  which  fixes  the  share  of  one  in  the 
profits  must  at  the  same  time  fix  either  the 
separate  or  the  joint  shares  of  the  other  two. 
To  fix  Tom's  share  at  forty  per  cent  is  to 
leave  but  sixty  per  cent  to  be  divided  between 
Dick  and  Harry.  To  fix  Dick's  share  at 
forty  per  cent  and  Harry's  share  at  thirty- 
five  per  cent  is  to  fix  Tom's  share  at  twenty- 
five  per  cent."  Now,  I  agree  with  Mr.  George 


PROGRESS     AND     PLENTY  33 

in  that,  entirely,  and  have  worked  out  the 
laws  of  distribution  in  harmony  with  it.  Mr. 
George  began  his  investigation  in  harmony 
with  it,  and  found  that  rent  increased  with  the 
advance  of  civilization;  and  that  the  increase 
in  rent  left  less  to  be  divided  between  laborer 
and  capitalist.  He  found  that  as  population 
increased,  and  improved  methods  of  produc- 
tion and  machinery  enabled  people  to  use  more 
land,  competition  for  its  use  raised  its  price, 
and  its  rent.  He  found  that  under  such  con- 
ditions there  would  be  more  wealth  produced, 
but  that  most  of  the  increase  would  go  to  the 
landlord. 

Then  he  tried  to  discover  how  the  capitalist 
and  laborer  divided  what  was  left.  He  saw 
that  capital  assisted  labor  to  produce  more 
wealth  and  that  the  more  they  produced  the 
more  they  would  have  to  divide.  Now,  while 
that  is  all  quite  true,  it  is  not  the  problem  he 
was  trying  to  solve.  He  found  under  what 
conditions  the  landlord  received  a  large  or  a 
small  share  of  what  was  produced.  He  then 
should  have  tried  to  find  under  what  condi- 
tions the  laborer  received  a  large,  and  under 
what  conditions  he  received  a  small  share  of 
what  the  landlord  left.  This  Mr.  George 
never  did.  He  did  not  stick  to  the  rule  he 
laid  down  in  his  illustration  of  the  three  part- 
ners, Tom,  Dick  and  Harry.  This  mistake 
prevented  him  from  seeing  the  importance  of 


34  PROGRESS     AND     PLENTY 

preventing  capitalists  from  getting  too  large 
a  share,  and  caused  him  to  concentrate  all  his 
energy  against  landlordism.  His  object  in 
trying  to  discover  the  laws  of  distribution  was 
to  find  why  wages  did  not  rise  with  the  pro- 
ductive power  of  labor.  There  are  two  rea- 
sons, and  George  only  discovered  one. 

Wages  can  only  depend  upon  what  the  land- 
lord leaves,  if  the  laborer  gets  all  that  the 
landlord  leaves;  but  he  has  to  divide  with  the 
capitalist.  What  the  landlord  leaves  might 
make  very  high  wages  if  the  laborer  got  it 
all,  and  yet  under  certain  conditions  the  capi- 
talist may  get  so  much  that  wages  may  be  very 
low.  We  will  see  as  we  get  on  that  Mr. 
George's  laws  of  distribution  are  not  complete, 
but  they  appear  to  harmonize.  His  law  of 
wages  is  product  minus  rent;  his  law  of  in- 
terest is  product  minus  rent;  they  are  both 
the  same  thing,  the  undivided  shares  of  capital 
and  labor.  If  the  laborer  received  all  that 
the  landlord  left,  the  rise  in  rent  would  explain 
why  wages  remain  low.  But  wages  are  only 
a  part  of  what  the  landlord  leaves,  and  until 
we  know  under  what  conditions  the  capitalist's 
share  is  large  or  small  we  do  not  know  the 
law  of  wages.  Returning  to  Mr.  George's 
illustration:  finding  that  Dick  receives  40% 
does  not  explain  why  Tom's  share  is  only  25%, 
but  when  we  learn  that  Dick  receives  40% 
and  also  that  Harry  receives  35%  then  we 


PROGRESS     AND     PLENTY  35 

can  understand  why  Tom's  share  is  only  25%. 

In  trying  to  discover  the  law  of  wages,  Mr. 
George  should  have  tried  to  discover  under 
what  conditions  the  capitalists  would  receive 
a  large  share,  and  not  under  what  conditions 
they  would  have  more  or  less  to  divide,  for 
that  is  a  problem  of  production,  and  not  of 
distribution. 

He  found  that  when  land  was  scarce  the 
landlord  gets  a  large  share,  and  we  all  know 
that  when  capital  is  scarce  the  capitalist  can 
get  a  large  share.  Mr.  George  saw  that  the 
laws  of  distribution  should  correlate  and  mutu- 
ally bound  each  other;  but  he  did  not  see  that 
only  one  law  was  required. 

All  Political  Economists  agree  that  supply 
and  demand  regulate  prices,  not  only  of  goods 
but  of  land  and  labor  as  well.  The  law  of 
supply  and  demand,  or  competition,  explains 
the  conditions  under  which  land,  labor,  or 
wealth  of  any  kind  brings  a  high  or  a  low 
price. 

Business  men  know  that  when  several  peo- 
ple offer  an  article  for  sale  that  very  few 
people  want,  the  price  will  be  low.  They 
know  that  if  there  are  many  good  salesmen 
out  of  employment,  they  can  hire  one  at  a  low 
salary,  and  they  know  that  they  will  have  to 
pay  more  for  a  desirable  lot,  or  business  site 
that  several  people  want,  than  for  one  where 
several  sites  are  unoccupied  and  offered  for 


86  PROGRESS     AND     PLENTY 

sale.  Why  Political  Economists  should  puz- 
zle their  brains  looking  for  three  laws  of  dis- 
tribution when  only  one  is  required,  and  they 
all  know  what  that  one  is,  is  more  than  I  can 
tell.  Mr.  George  came  very  near  seeing  that 
only  one  law  was  needed.  He  says:  "In  no 
politico-economic  treatise  that  I  know  of  are 
these  laws  of  distribution  brought  together  so 
that  the  reader  can  take  them  in  at  a  glance 
and  recognize  their  relation  to  each  other." 
Again  he  says:  "Let  us  then  seek  the  true 
laws  of  the  distribution  of  the  produce  of  labor 
into  wages,  rent  and  interest.  The  proof  that 
we  have  found  them  will  be  in  their  correla- 
tion— that  they  meet  and  relate  and  mutually 
bound  each  other."  Competition  explains 
how  wages  will  be  high  when  plenty  of  land 
is  offered  for  use  and  capitalists  are  want- 
ing to  hire  more  men  than  offer  their  ser- 
vices; and  that  with  these  conditions  reversed 
wages  will  be  low.  It  explains  that  rent  will 
be  high  when  labor  and  capital  require  more 
land  than  is  offered;  and  low  when  more  land 
is  available  than  required.  It  also  explains 
how  the  capitalist  gets  the  largest  share,  when 
landlords  and  laborers  require  more  capital 
than  is  offered  for  use,  and  the  smallest  share 
when  more  capital  is  offered  for  use  than  re- 
quired. Here  is  a  perfectly  harmonious  ex- 
planation of  h«w  wealth  is  iividei  that  I  4* 
think  any  *ne  can  dispute.  Although 


PROGRESS     AND     PLENTY  37 

economic  writers  have  not  stated  it  just  that 
way,  I  think  that  most  of  them  really  appre- 
hend the  law.  Mr.  George  accepted  Ricardo's 
law  of  rent,  and  saw  that  what  labor  and  cap- 
ital got  to  divide  between  them  was  only  what 
they  could  earn  at  the  margin  of  production; 
that  all  above  this  went  to  the  landowner;  but 
he  never  got  any  farther.  His  method  of 
finding  the  law  of  wages  was  to  leave  capital 
out  of  consideration,  and  consider  only  the 
effect  of  rent  upon  wages.  Now,  how  could 
he  expect  to  find  the  law  of  wages  in  that  way? 
How  could  he  expect  to  divide  an  apple  be- 
tween Tom,  Dick  and  Harry  unless  he  gave 
them  each  a  share?  But  that  is  what  he  tries 
to  do. 

His  law  of  wages  is:  "Wages  depend  upon 
the  margin  of  cultivation,  falling  as  it  falls 
and  rising  as  it  rises."  I  deny  that  wages 
depend  upon  the  margin  of  cultivation  except 
where  the  laborer  either  works  without  capital 
or  gets  the  use  of  capital  free;  and  even  then 
wages  are  generally  much  higher  than  at  the 
margin  of  cultivation.  Wages  at  the  margin 
of  cultivation  are  the  lowest  point  that  under 
the  most  adverse  circumstances  laborers  can 
ever  be  forced  to  accept.  Wages  depend  upon 
competition.  Competition  can  never  force 
them  below  the  margin  of  production;  and 
it  seldom  forces  them  that  low. 

The  law  *f  wages  must  ntt  •nly  explain  the 


38  PROGRESS     AND     PLENTY 

lowest  possible  wages  but  also  the  highest,  and 
all  wages.  To  prove  that  Mr.  George's  law  of 
wages  does  not  always  explain  high  wages,  let 
us  take  an  illustration:  Two  men,  A  and  B, 
went  in  search  of  gold,  a  long  way  from 
civilization.  A  found  a  piece  of  land  that 
would  pay  $20  per  day,  and  took  possession. 
B  could  only  produce  $5  a  day  on  the  best 
land  he  could  find.  Now,  according  to  Mr. 
George's  theory,  B  would  work  for  A  for  $5 
per  day.  I  think  he  would  be  very  foolish  if 
he  did.  When  A  would  come  to  him  and 
offer  him  $5  per  day  he  would  probably  tell 
him  that  he  could  do  that  well  working  on 
his  own  account,  which  he  much  preferred, 
that  A  could  well  afford  to  pay  $10  or  $15 
per  day  and  that  he  would  not  work  for  him 
for  less,  and  the  chances  are  that  he  would 
get  his  price. 

Now,  if  there  were  several  men  with  valua- 
ble claims,  wanting  B's  services,  he  might  get 
close  to  $20  per  day;  and  on  the  other  hand, 
if  there  were  several  men  working  on  $5 
claims  some  of  them  might  hire  for  little  more 
than  $5  per  day.  That  is  the  way  competi- 
tion always  works;  but  in  some  places  there 
is  no  land  to  be  had  free,  and  still  when  work- 
men are  scarce  wages  are  high.  Unemployed 
laborers  must  find  employment  at  some  wage. 
They  are  often  forced  by  necessity  to  com- 
pete with  one  another  for  work,  sometimes 


PROGRESS     AND     PLENTY  39 

even  to  try  to  take  work  from  other  workmen 
by  offering  to  work  for  less  wages. 

When  there  is  much  capital  idle,  the  rate  of 
interest  is  forced  down,  just  as  wages  are  when 
workmen  are  idle. 

I  hope  I  have  made  it  plain  that  the  division 
of  wealth  between  landlord,  laborer  and  capi- 
talist depends  upon  the  relative  scarcity  of 
the  three  factors  in  production,  land,  labor  and 
capital.     Laborers  cannot  refuse  to  accept  the 
offer  of  low  wages  when  all  the  best  jobs  are 
taken  and  they  have  nothing  to  fall  back  on; 
but  when  they  have  free  land  to  fall  back  on, 
or  when  there   are   more   jobs   offered   than 
there  are  laborers  to  accept,  then  only  the  best 
jobs  are  taken  and  wages   rise.     Landlords 
cannot  put  up  the  price  of  land  unless  there 
is  a  demand  for  more  land  than  is  offered  for 
sale,  nor  can  capitalists  make  large  profits 
when  opportunities  for  investment  are  scarce, 
any  more  than  laborers  can  raise  wages  when 
there  is  an  over  supply  of  laborers.     I  think 
I  have  made  it  plain  that  competition  is  the  law 
of  distribution.     It  explains  under  what  con- 
ditions the  price  of  either  land,  labor,  or  cap- 
ital, will  be  high  or  low.     In  other  words,  it 
explains  under  what   conditions   each   factor 
gets  the  large,  intermediate,  or  small  share  of 
the  product.    If  Mr.  George  had  stuck  to  the 
idea  that  the  laws  of  distribution  are  laws  of 
proportion  as  he  explained  in  his  illustration 


40  PROGRESS     AND     PLENTY 

of  Tom,  Dick,  and  Harry,  which  I  quoted,  he 
must  have  discovered  the  law,  but  in  studying 
the  relation  between  laborer  and  capitalist,  he 
took  a  different  point  of  view.     He  refers  to 
the  illustration  in  these  words:  "This  natural 
relation    between    interest    and    wages — this 
equilibrium  at  which  both  will  represent  equal 
returns  for  equal  exertions — may  be  stated  in 
a  form  which  suggests  a  relation  of  opposition; 
but  this  opposition  is  only  apparent.     In  a 
partnership    between   Dick   and    Harry,    the 
statement  that  Dick  receives  a  certain  propor- 
tion of  the  profits  implies  that  the  portion  of 
Harry  is  less  or  greater  as  Dick's  is  greater  or 
less;  but  where,  as  in  this  case,  each  gets  only 
what  he  adds  to  the  common  fund,  the  increase 
of  the  portion  of  the  one  does  not  decrease 
what  the  other  receives."    I  reply  to  that  ar- 
gument: A  relation  of  opposition  is  the  way 
it  must  be  stated  if  we  are  to  discover  under 
what  conditions  wages  will  be  high  or  low.    It 
is  the  way  Mr.  George  said  it  should  be  stated 
in  his  illustration  of  Tom,  Dick,  and  Harry. 
He  says:    "To  fix  Tom's  share  at  40%  is  to 
leave  but  60%  to  be  divided  between  Dick  and 
Harry.     To   fix  Dick's   share   at   40%    and 
Harry's  share  at  35%,  is  to  fix  Tom's  share 
at  25%."    According  to  that  statement,  each 
one  is  opposed  to  the  other  two,  and  that  is 
evidently  the  truth,  for  it  is  treating  all  the 
shares  in  the  sense  of  proportion;  while  to  say 


PROGRESS     AND     PLENTY  41 

that  each  gets  what  he  adds  to  a  common  fund 
is  a  statement  which  he  never  proved,  and  it 
is  a  statement  very  easily  disproved. 

In  the  first  place,  if  labor  and  capital  each 
get  what  they  add  to  the  common  fund,  it  can 
only  be  at  the  margin  of  production,  where 
they  get  all  they  produce,  for  on  land  that 
yields  rent  the  landlord  gets  a  share  without 
adding  anything  to  the  common  fund.  Con- 
sequently upon  land  yielding  rent  they  do  not 
get  what  they  each  produce  to  divide.  So  if 
the  statement  is  true  in  any  case  it  can  only 
be  true  where  labor  works  with  the  assistance 
of  capital  upon  free  land.  I  will  now  use  an 
illustration  to  prove  that  even  upon  free  land 
capital  cannot  claim  all  it  adds  to  the  product. 

A  laborer  is  working  on  free  land  with  prim- 
itive tools.  A  capitalist  comes  along  and  says : 
I  am  sorry  to  see  you  working  so  hard  and  pro- 
ducing so  little.  I  will  furnish  you  with  up- 
to-date  machinery  and  you  can  then  produce 
a  great  deal  more  wealth,  and  I  am  willing  to 
take  for  my  share  just  what  I  enable  you  to 
make  above  what  you  are  now  making  without 
my  help.  Would  any  laborer  be  so  foolish  as 
to  accept  such  a  proposal?  I  think  not.  The 
laborer  would  reply:  That  is  not  a  fair  bar- 
gain. Your  capital  will  earn  nothing  unless  I 
use  it,  and  still  you  want  all  it  adds  to  the 
product  of  my  labor.  You  offer  me  no  induce- 
ment to  use  your  capital,  and  I  will  not  accept 


42  PROGRESS     AND     PLENTY 

it  on  those  terms.     I  am  willing  to  use  your 
capital  on  conditions  that  will  benefit  us  both, 
but  not  for  your  sole  benefit.    I  will  use  your 
capital  on  condition  that  I  keep  as  much  as 
I  could  make  without  its  use,  and  one-half 
of  what  your  capital  adds  to  the  product.    In 
that  way  we  will  both  be  gainers.     Without 
competition  that  is  probably  the  agreement 
they  would  arrive  at ;  but  with  several  laborers 
competing  for  a  small  amount  of  capital,  the 
laborers  would  offer  considerably  more  for  its 
use.    Of  course  competition  works  both  ways, 
and  if  several  capitalists  were  offering  to  sup- 
ply the  laborers  with  more  capital  than  they 
needed,  the  capitalists  would  compete  for  la- 
bor and  the  laborers  would  get  the  capital 
they  required  for  a  very  small  part  of  what 
they  produced.    Does  not  this  prove  that  in- 
terest does  not  depend  upon  what  capital  adds 
to  the  product  of  labor,  but  upon  competition 
— upon  the  supply  of  and  demand  for  capital? 

This  is  not  a  new  theory.  It  was  held  by 
some  economic  writers  before  Progress  and 
Poverty  was  written;  and  is  still  held  by  some 
writers. 

Mr.  George  gives  his  reason  for  not  accept- 
ing it.  He  says:  "The  effect  of  all  the  cir- 
cumstances which  give  rise  to  the  differences 
between  wages  in  different  occupations  may  be 
included  as  supply  and  demand,  and  it  is  per- 
fectly correct  to  say  that  the  wages  in  different 


PROGRESS     AND     PLENTY  43 

occupations  will  vary  relatively  according  to 
the  differences  in  the  supply  and  demand  of 
labor — meaning  by  demand  the  call  which  the 
community  as  a  whole  makes  for  services  of  a 
particular  kind;  and  by  supply  the  relative 
amount  of  labor  which,  under  the  existing  con- 
ditions, can  be  determined  to  the  performance 
of  those  particular  services.  But  though  this  is 
true  as  to  the  relative  differences  of  wages, 
when  it  is  said,  as  is  often  said,  that  the  general 
rate  of  wages  is  determined  by  supply  and  de-. 
mand,  the  words  are  meaningless.  For  supply 
and  demand  are  but  relative  terms.  The  sup- 
ply of  labor  can  only  mean  labor  offered  in 
exchange  for  labor  or  the  produce  of  labor,  and 
the  demand  for  labor  can  only  mean  labor  or 
the  produce  of  labor  offered  in  exchange  for 
labor.  Supply  is  thus  demand  and  demand 
supply,  and  in  the  whole  community  one  must 
be  co-extensive  with  the  other." 

Mr.  George  seems  to  have  overlooked  the 
fact  that  wanting  an  article  does  not  create 
a  demand  for  it,  unless  the  person  wanting  it 
has  something  that  other  people  want  to  offer 
in  exchange.  If  supply  is  demand  and  de- 
mand supply,  there  could  never  be  unemployed 
men,  with  wants  unsupplied  looking  for  work 
and  failing  to  find  it.  But  such  is  not  the  case. 
There  are  times  when  thousands  of  destitute 
men  are  without  employment  and  cannot  find 
an  opportunity  either  to  produce  the  things 


44  PROGRESS     AND     PLENTY 

they  need,  or  other  goods  to  exchange  for 
them.  At  such  times  there  is  an  over  supply  of 
goods,  not  because  people  do  not  want  them, 
but  because  the  wages  of  the  great  majority 
have  been  so  low  that  they  could  not  buy  them, 
and  there  were  more  produced  than  those  with 
means  to  buy  could  consume.  At  such  times 
there  are  so  many  seeking  employment  and 
competing  for  the  few  jobs  offered,  that  wages 
fall  very  low.  The  demand  for  laborers  at 
such  times  does  not  equal  the  supply.  There 
should  be  a  demand  for  labor  as  long  as  there 
are  laborers  with  wants  unsupplied,  and  with 
high  wages  there  will  be.  Supply  and  demand 
are,  as  Mr.  George  says,  relative  terms;  but 
not  in  the  narrow  sense  he  stated.  Competi- 
tion is  not  only  amongst  laborers  for  employ- 
ment, but  supply  and  demand  affects  the 
whole  three  factors  according  to  their  relative 
scarcity,  as  I  pointed  out  before.  Conse- 
quently the  share  of  each  factor  depends  upon 
the  relative  scarcity  of  land,  labor,  and  capi- 
tal. Under  certain  conditions  landlords  and 
capitalists  compete  for  laborers,  that  is  when 
laborers  are  scarce.  When  conditions  change 
and  some  laborers  cannot  find  employment, 
then,  instead  of  capitalists  competing  for  la- 
borers, laborers  compete  for  work,  so  supply 
and  demand  does  not  only  determine  wages 
between  different  occupations,  but  all  wages. 
Competition  does  not  divide  the  shares  of 


PROGRESS     AND     PLENTY  45 

the  different  factors  in  production,  according 
to  what  each  factor  contributes;  but  gives  the 
small  share  to  the  factor  that  is  compelled  by 
necessity  to  accept  it.  If  the  three  factors  can- 
not agree  on  terms  there  is  a  strike.  There 
is  never  a  strike  between  landlord  and  cap- 
italist because  land  and  capital  can  be  ex- 
changed and  a  revenue  derived  from  either 
without  labor  on  the  part  of  the  owner,  as  long 
as  enough  laborers  can  be  kept  dependent 
upon  them.  We  hear  a  good  deal  about  gov- 
ernment of  the  people  by  the  people  and  for 
the  people;  but  such  a  government  has  never 
existed.  It  may  be  almost  in  sight,  but  so 
far  it  has  always  been  the  rich  who  governed, 
and  their  main  object  has  been  to  keep  a  suffi- 
cient number  of  people  dependent  to  enable 
themselves  to  live  in  luxury  without  doing  any 
physical  labor.  That  being  the  case,  there  is 
no  occasion  for  dispute  between  landlord  and 
capitalist.  If  a  capitalist  finds  that  it  pays 
better  to  be  a  landlord  he  can  buy  land,  and  if 
a  landlord  wants  to  become  a  capitalist  he  can 
do  so  either  by  selling  land  or  saving  rent. 
They  are  generally  combined  in  the  same  per- 
son and  belong  to  the  wealthy  class. 

On  the  other  hand,  there  are  always  large 
numbers  of  laborers  entirely  dependent  upon 
the  owners  of  land  and  capital  for  subsistence. 
They  can  only  refuse  to  accept  low  wages  until 
their  savings  are  consumed,  and  in  a  strike 


46  PROGRESS     AND     PLENTY 

must  always  suffer  more  than  their  employ- 
ers. Strikes  and  lockouts  can  never  perma- 
nently settle  the  war  between  capitalists  and 
laborers  over  the  question  of  wages;  and  a 
better  plan  must  be  adopted  before  there  will 
be  plenty  of  work  and  high  wages  for  all. 

At  the  time  Progress  and  Poverty  was  writ- 
ten there  was  probably  no  work  on  political 
economy  where  the  laws  of  distribution  were 
brought  together  so  that  their  relation  could 
be  recognized  at  a  glance.  But  a  book  writ- 
ten since  then,  "Introduction  to  Economics," 
by  Henry  R.  Seager,  does  this.  He  says: 
"The  general  law  of  competitive  distribution 
for  a  society  allowed  to  attain  the  state  of  nor- 
mal equilibrium  is,  then,  that  each  factor  in 
production  has  assigned  to  it  a  share  in  dis- 
tribution corresponding  to  what  it  itself  pro- 
duces. If  rent,  wages  and  interest  be  defined 
as  the  prices  paid  respectively  for  services  to 
production  of  pieces  of  land,  workmen,  and 
capital  goods,  the  law  may  be  stated  to  be, 
that  competition  tends  to  put  a  price  on  the 
services  of  each  of  the  factors  of  production 
corresponding  to  the  price  which  attaches  to 
its  particular  contribution  to  the  product." 

Here  he  claims  what  I  have  been  trying  to 
prove:  that  supply  and  demand  or  competi- 
tion assigns  to  each  factor  its  share,  and  also 
claims,  what  I  have  been  trying  to  disprove, 
that  each  gets  what  it  adds  to  the  product. 


PEOGRESS     AND     PLENTY  47 

Henry  George  agrees  with  him  as  to  labor 
and  capital  dividing  their  joint  share  accord- 
ing to  what  each  produces  at  the  margin  of 
production,  but  does  not  admit  that  supply 
and  demand  decides  what  each  receives. 

George  would  also  disagree  with  him  as  to 
land  getting  what  it  adds  to  the  product,  and 
on  the  merits  or  demerits  of  our  land  system, 
George  declaring  it  to  be  iniquitous,  and 
Seager  weakly  defending  it. 

Perhaps  I  can  make  it  clear  why  we  hold 
such  different  views.  I  can  at  least  explain  my 
point  of  view  by  using  an  illustration:  A  few 
men  settle  on  a  small  island  and  divide  it 
equally  amongst  themselves.  To  make  the 
case  as  simple  as  possible,  we  will  suppose 
that  there  are  only  two  qualities  of  land,  and 
that  the  best  will  yield  double  what  the  poor 
land  will  yield  to  labor. 

We  will  also  suppose  that  each  settler  has 
double  the  amount  of  land  that  he  can  use  him- 
self. We  will  suppose  also  that  the  men  on 
the  poor  quality  of  land  can  make  two  dollars 
per  day  by  their  labor;  and  those  on  the  good 
land  can  earn  four. 

Now,  according  to  political  economists  gen- 
erally, the  men  on  the  poor  land — the  men  at 
the  margin  of  cultivation — would  work  for  the 
men  on  the  good  land  for  two  dollars  per  day. 
I  claim  that  they  will  not  work  for  the  others 
without  some  inducement,  and  in  this  case 


48  PROGRESS     AND     PLENTY 

there  is  none.  I  claim  that  the  men  on  the 
poor  land  would  prefer  to  employ  themselves 
to  working  for  others  for  the  same  wages  that 
they  could  earn  for  themselves;  and  that  if 
they  would  form  a  union  and  set  a  price  for 
labor  at  three  dollars  per  day,  or  even  higher, 
they  would  probably  get  it;  because  the  men 
on  the  good  land  could  afford  to  pay  it,  and 
the  men  on  the  poor  land  having  an  independ- 
ent income  could  never  be  starved  into  accept- 
ing any  terms  whatever. 

Now  if  the  land  had  been  justly  divided  at 
the  start,  they  could  all  have  made  four  dollars 
a  day  by  their  labor — supposing,  of  course 
that  they  were  all  equally  capable.  The  men 
on  the  good  land  have,  by  securing  title  to  all 
the  good  land,  forced  wages  down  from  four 
to  two  dollars  per  day,  for  that  is  all  that  the 
men  on  the  poor  land  can  make  when  working 
for  themselves ;  and  the  men  on  the  good  land 
have  done  nothing  to  entitle  them  to  more  than 
an  equal  share. 

Mr.  Seager  says:  "Each  factor  in  produc- 
tion has  assigned  to  it  a  share  in  distribution 
corresponding  to  what  it  itself  produces."  He 
does  not  complain  of  the  injustice  of  land  mo- 
nopoly. The  raw  material  for  all  wealth  is 
produced  on  land,  but  it  is  not  the  land,  but 
the  owner  of  land  who  gets  the  rent.  What 
does  he  do  as  owner  to  entitle  him  to  a  share 
of  the  wealth  produced  by  other  laborers?  He 


PROGRESS     AND     PLENTY  49 

is  entitled  to  the  use  of  as  much  land  as  other 
people,  but  no  more.  He  contributes  nothing 
whatever  to  production,  but  he  does  prevent 
wealth  from  being  produced  to  some  extent  by 
appropriating  more  land  than  he  needs.  If  we 
can  produce  more  wealth  without  the  landlord 
than  with  him,  and  if  he  has  neither  made  the 
land  nor  done  anything  for  it,  except  keep 
others  from  using  it,  why  continue  him  in 
power?  If  the  men  on  the  good  land  on  the 
island  held  it  for  ten  years,  and  at  the  end  of 
that  time  were  compelled  to  give  up  their  sur- 
plus land  should  they  be  paid  for  it,  or  should 
they  be  required  to  pay  the  men  on  the  poor 
land  for  keeping  them  from  using  good  land 
so  long?  Did  not  the  men  on  the  good  land 
confiscate  property  rightfully  belonging  to 
others  when  they  claimed  more  land  than  they 
needed?  Henry  George's  plan  for  restoring 
equal  rights  to  all  in  the  use  of  land,  is  to  re- 
lieve all  from  taxation  and  take  rent  for  pub- 
lic revenues. 

I  will  discuss  that  question  farther  on  when 
considering  remedies,  but  we  must  get  a  clear 
understanding  of  the  natural  laws  governing 
distribution,  before  we  deal  with  remedies.  I 
think  I  can  safely  say  that  our  industrial  sys- 
tem is  faulty,  that  wealth  is  not  justly  divided 
between  the  three  factors,  and  that  labor  does 
not  get  its  just  share.  I  think  that  these  facts 
are  established,  first  that  competition  is  the 


50  PROGRESS     AND     PLENTY 

law  of  distribution,  and  that  competition  gives 
the  largest  share  to  the  scarcest  factor  and  the 
smallest  share  to  the  most  plentiful  one.  Sec- 
ond. That  as  competition  under  favorable 
conditions  raises  wages,  it  is  not  necessary  to 
abolish  competition  in  order  to  have  high 
wages,  but  that  conditions  must  be  changed 
and  our  system  of  industry  adjusted  in  such 
a  way  that  competition  will  raise  wages  in- 
stead of  lowering  them.  Third,  our  industrial 
system  gives  a  share  to  one  factor,  the  land- 
lord, who  is  not  entitled  to  anything — and  also 
gives  special  privileges  and  consequently  too 
large  a  share,  to  the  capitalist  besides. 

I  believe  that  the  laborer  is  entitled  to  more 
than  he  can  earn  at  the  margin  of  cultivation 
without  the  use  of  capital,  even  if  land  was 
not  monopolized.  I  believe  that  competition 
under  normal  conditions  will  give  him  more. 
It  is  the  province  of  Political  Economy  to  dis- 
cover what  are  normal  or  natural  conditions 
and  show  how  to  change  our  institutions  and 
customs  that  are  unjust.  Mr.  Seager  agrees 
with  me  in  that,  he  says:  "In  actual  industrial 
society,  as  has  already  been  pointed  out,  eco- 
nomic relations  fall  far  short  of  this  competi- 
tive ideal.  Monopoly  influences  intervene  to 
secure  monopoly  profits  for  some  entrepre- 
neurs at  the  expense  of  the  shares  assigned  to 
wages  and  interest.  Changes  occur  to  throw 
the  whole  mechanism  of  production  out  of  ad- 


PROGRESS     AND     PLENTY  51 

justment  and  to  occasion  profits  or  losses  to 
other  entrepreneurs  which  must  in  time  be  dis- 
tributed  among  all  participants.  Special  ob- 
stacles prevent  certain  groups,  especially 
among  the  laboring  population,  from  getting 
the  full  benefit  of  the  influence  of  competition, 
and  make  their  earnings  less  than  they  ought 
economically  to  be.  Full  account  must  be 
taken  of  these  and  other  influences  when  it  is 
attempted  to  make  practical  application  of 
economic  theories,  as  in  the  later  chapters  of 
this  book.  Notwithstanding  them,  the  law  of 
competitive  distribution  which  has  been  ex- 
plained is  the  norm,  to  which  actual  relations 
tend  always  to  adjust  themselves.  Its  mas- 
tery is  preliminary,  not  only  to  a  thorough  un- 
derstanding of  prevailing  conditions,  but  to 
any  intelligent  effort  towards  improving  those 
conditions  as  they  affect  the  mass  of  men." 
The  mistakes  made  by  writers  on  political 
economy  as  taught  in  the  schools,  are  caused 
mostly  by  their  considering  unnatural  condi- 
tions as  normal.  They  consider  the  problems 
they  discuss  from  the  point  of  view  of  the  en- 
trepreneur instead  of  from  the  point  of  view 
of  the  independent  laborer  who  makes  a  living 
at  the  margin  of  cultivation  which  I  consider 
the  normal  condition.  Mr.  Seagar  holds  to  two 
theories  that  do  not  harmonize.  He  believes 
that  competition,  or  supply  and  demand,  de- 
cides what  each  factor  in  production  receives. 


52  PROGRESS     AND     PLENTY 

He  also  holds  that  competition  gives  to  each 
of  the  factors  what  it  itself  contributes  to  the 
product.  One  of  these  theories  may  be  cor- 
rect, but  they  cannot  both  be,  for  they  are  an- 
tagonistic. Let  me  illustrate :  A  man  is  work- 
ing on  free  land  without  machinery.  Along 
comes  a  man  with  a  machine  and  offers  to  lend 
it  to  the  laborer.  With  the  machine  the  laborer 
can  do  twice  as  much,  and  the  capitalist  de- 
mands one-half.  The  machine  will  earn 
nothing  unless  the  laborer  uses  it,  but  the  la- 
borer can  earn  as  much  without  it  as  he  will  if 
he  accepts  the  capitalist's  offer.  Why  should 
he  accept?  He  would  not  accept  on  those 
terms.  He  would  probably  want  one-half  of 
the  increase  at  least ;  and  as  the  machine  would 
make  nothing  unless  it  is  used,  the  capitalist 
would  probably  accept.  In  this  case  the  la- 
borer would  get  more  than  he  added  to  the 
product  and  the  capitalist  less,  but  there  has 
been  no  competition.  Now  let  us  see  what 
difference  competition  will  make.  If  there 
were  other  capitalists  with  idle  machines  some 
of  them  would  offer  to  take  still  less,  for  the 
use  of  their  machines.  But  if  there  were  sev- 
eral laborers  working  without  machines  and 
seeing  the  man  with  the  machine  earning  so 
much  more  than  themselves,  they  would  all 
want  machines  in  order  to  make  higher  wages. 
As  there  was  only  one  machine  to  be  had,  they 
would  offer  more  for  its  use  than  the  man  using 


PROGRESS     AND     PLENTY  53 

it  was  giving.  But,  as  their  object  in  wanting 
the  machine  was  to  earn  more  wealth,  none  of 
them  would  offer  all  that  the  machine  would 
add  to  the  product.  This  shows  that  the  cap- 
italist under  the  most  favorable  circumstances 
cannot  claim  the  full  earnings  of  capital,  and 
that  Mr.  S eager  is  mistaken  in  claiming  that 
competition  gives  to  each  share  in  distribution 
what  the  corresponding  factor  adds  to  the 
product.  What  laborers  can  earn  at  the  mar- 
gin of  production  without  capital  is  the  least 
that  laborers  can  be  forced  to  accept  under 
the  most  adverse  circumstances,  and  is  not  the 
law  of  wages.  What  the  use  of  capital  adds 
to  the  product  is  more  than  the  capitalist  can 
claim  under  the  most  favorable  circumstances, 
and  is  not  the  law  of  interest.  Now  I  think  I 
have  demonstrated  that  competition  is  the  law 
of  distribution,  and  that  high  wages  depend 
upon  low  rent  accompanied  by  low  interest, 
and  small  profits  for  capital.  Also  that  com- 
petition gives  the  large  share  to  the  scarce  fac- 
tor, and  the  small  share  to  the  factor  that  is  in 
excess  of  the  demand.  If  economic  writers  do 
not  know  that  such  is  the  case,  laborers  and 
business  men  do. 

We  can  now  consider  what  reforms  are  nec- 
essary to  abolish  poverty  and  give  employment 
at  high  wages  to  all.  There  are  plenty  of  la- 
borers able  and  willing  to  produce,  an  abund- 
ance for  all,  plenty  of  good  land  upon  which 


54  PROGRESS     AND     PLENTY 

to  produce  it,  and  plenty  of  capital  to  enable 
labor  to  obtain  the  best  results;  or  if  anything' 
is  lacking,  labor  only  needs  the  opportunity  to 
supply  it,  and  it  will  soon  be  forthcoming. 


CHAPTER  IV. 

HENRY  GEORGE'S  REMEDY. 

Mr.  George  saw  that  the  power  of  the  land- 
owner is  identical  with  the  power  of  the  slave 
owner.  If  the  land  is  all  owned,  landless  men 
are  forced  by  necessity  to  accept  the  terms  of 
the  landlord  or  starve.  Under  these  condi- 
tions, a  slave  owner  has  no  more  power  over 
his  slaves  than  the  landlord  over  his  tenants. 
Where  there  is  free  land,  men  are  not  abso-' 
lutely  dependent,  and  if  the  margin  of  culti- 
vation is  so  high  that  laborers  can  make  a  com- 
fortable living  on  free  land,  then  the  laborers 
are  free.  The  private  ownership  of  land  can 
be  defended  upon  the  same  grounds  as  the 
ownership  of  men,  and  upon  no  other.  The 
same  arguments  are  available  in  both  cases 
and  are  as  strong  for  the  one  institution  as  for 
the  other.  All  men  have  a  right  to  life.  If 
they  have,  they  have  a  right  to  live  on  the  earth 
without  buying  the  privilege  from  any  indi- 
vidual, for  there  is  no  other  place  they  can 
live.  All  men  have  a  right  to  liberty.  If  so 
they  have  a  right  to  land,  for  they  cannot  be 
free  on  land  owned  by  another.  Mr.  George 


56  PROGRESS     AND     PLENTY 

says:  "There  is  nothing  strange  in  the  fact 
that,  in  spite  of  the  enormous  increase  in  pro- 
ductive power  which  this  century  has  wit- 
nessed, and  which  is  still  going  on,  the  wages 
in  the  lower  and  wider  strata  of  industry 
should  everywhere  tend  to  the  wages  of  slav- 
ery— just  enough  to  keep  the  laborer  in  work- 
ing condition.  For  the  ownership  of  the  land, 
on  which  and  from  which  a  man  must  live,  is 
virtually  the  ownership  of  the  man  himself, 
and  in  acknowledging  the  right  of  some  indi- 
viduals to  the  exclusive  use  and  enjoyment  of 
the  earth,  we  condemn  other  individuals  to 
slavery  as  completely  as  though  we  had  for- 
mally made  them  chattels." 

Mr.  George  proposed  a  very  effectual  way 
to  restore  men  to  liberty,  which  is  becoming 
popular  the  world  over,  and  has  been  partly 
adopted  in  several  places.  He  proposed  tak- 
ing the  unimproved  value  of  the  land  (eco- 
nomic rent)  for  public  revenues  instead  of 
taxes,  which  he  proposed  to  abolish.  Of 
course,  if  the  ground  rent  was  not  enough  for 
public  needs,  the  deficiency  must  be  raised  in 
some  other  way;  but  Mr.  George  and  most 
of  his  followers  think  it  would  be  sufficient. 
Public  revenues  are  a  good  deal  like  individ- 
ual incomes.  If  we  have  very  little  to  spend 
we  try  to  get  along  with  little,  and  make  the 
best  of  it,  and  if  we  have  a  great  deal  and  have 
intelligence  we  can  still  put  it  to  a  good  use. 


PROGRESS     AND     PLENTY  57 

It  is  the  same  with  public  incomes.  If  we  can 
raise  a  large  public  fund,  we  can  find  plenty 
of  good  ways  to  use  it.  Any  progressive  com- 
munity could,  and  generally  does,  spend  more 
than  it  can  raise  by  taxation.  There  is  no  ques- 
tion but  what  Mr.  George's  plan  would  give 
us  a  higher  margin  of  cultivation,  by  forcing 
unused  land  on  the  market.  A  higher  margin 
of  cultivation  would  give  us  higher  wages  and 
freer  men. 

Other  plans  have  been  proposed  to  restore 
the  earth  to  all,  but  I  consider  Mr.  George's 
the  simplest,  most  practical,  and  effectual.  I 
cannot  improve  upon  his  proposal  for  land 
reform.  We  not  only  have  his  works,  but  nu- 
merous books  by  his  followers,  and  there  is  no 
occasion  for  me  to  take  up  much  space  repeat- 
ing arguments  with  which  every  one  is  familiar. 
Mr.  George's  failure  to  work  out  the  laws  of 
distribution  prevented  him  from  seeing  the  im- 
portance of  reforms  that  would  make  it  easier 
for  laborers  to  obtain  capital  and  reduce  the 
profits  of  capital  that  are  at  the  expense  of 
high  wages. 

Interest  is  paid  for  the  use  of  capital  to  as- 
sist in  the  production  of  wealth.  Rent  is  paid 
for  the  use  of  land  for  the  same  purpose.  A 
person  renting  improved  land  really  pays  both 
rent  and  interest,  although  we  speak  of  the 
whole  payment  as  rent.  Economic  rent  is  only 
what  is  paid  on  the  value  of  the  bare  land; 


58  PROGRESS     AND     PLENTY 

what  we  pay  for  the  use  of  the  improvements  is 
interest,  but  interest  and  rent  are  so  nearly 
identical  in  their  nature  that  we  call  the  whole 
payment  rent.  Interest  is  paid  for  the  use  of 
money.  Our  money  system  is  almost  as  bad 
as  our  land  system — perhaps  worse — and  an 
improved  system  of  currency  would  do  as  much 
to  raise  wages  as  an  improved  land  system. 
Mr.  George  showed  how  to  improve  our  sys- 
tem of  land  tenure  by  taking  rent  for  public 
uses,  and  the  thought  occurred  to  me  several 
years  ago  that  if  taking  rent  for  public  use 
would  solve  the  land  problem,  taking  interest 
for  public  use  ought  to  solve  the  money  prob- 
lem. How  well  it  will  do  it  the  following  pages 
will  show.  Others  have  seen  that  the  money 
question  and  the  land  question  were  related. 
I  will  quote  from  "Our  Monetary  System,"  by 
Mary  E.  Hobart: 

In  an  open  letter  to  Henry  George,  she 
says:  "In  all  your  arguments  in  your  letter 
to  the  Pope  against  land  monopoly  I  noticed 
none  which  might  not  with  equal  force  and  jus- 
tice be  used  against  money  monopoly.  That 
which  is  true  of  one  is  true  of  the  other.  .  .  . 
Our  land  system  and  money  system  as  today 
organized  are  so  interlocked,  and  so  interde- 
pendent upon  each  other,  that  it  is  difficult  to 
analyze  their  relations  and  separately  establish 
the  evils  which  arise  from  each." 

I  found  that  the  same  principles  applied  ta 


PROGRESS     AND     PLENTY  59 

both  problems,  and  discovered  how  they  could 
be  applied  so  as  to  give  us  a  scientific  system 
of  currency.  I  believe  my  solution  of  the 
money  problem  equals  Henry  George's  solu- 
tion of  the  land  question,  and  my  principal  rea- 
son for  writing  this  book  is  to  bring  it  before 
the  public.  I  think  one  of  the  strongest  pos- 
sible arguments  for  taxing  land  values  is  that 
the  same  plan  with  slight  variation  will  give  us 
a  scientific  money  system. 


CHAPTER  V 

MONEY  REFORM 

A  year  or  so  ago  a  pamphlet  came  to  me 
entitled:  "The  National  Citizens'  League  for 
the  Promotion  of  a  Sound  Banking  System. 
The  Origin  of  the  League."  I  opened  the 
pamphlet  and  read:  "The  Origin  of  the 
League."  As  a  result  of  the  panic  of  1907  the 
country  became  concerned  for  the  commercial 
safety  of  its  future.  This  anxiety  so  pressed 
upon  Congress  that  the  Aldrich-Vreeland 
Currency  Bill  of  1908  was  passed.  This  bill 
was  recognized  purely  as  a  temporary  meas- 
ure, and  the  National  Monetary  Commission 
was  created  to  investigate  the  problem  of 
banking  reform.  At  the  meeting  of  the  Na- 
tional Board  of  Trade  held  in  Washington 
on  January  25,  26,  and  27,  1910,  the  follow- 
ing resolutions  were  unanimously  adopted: 
"Whereas,  we  assume  that  a  plan  for  the 
revision  of  our  currency  system  will  be  for- 
mulated after  the  National  Monetary  Com- 
mission has  made  its  final  report ;  and  Where- 
as, a  revision  of  our  currency  system  upon 
a  permanently  sound  and  scientific  basis  is 
of  vital  importance  to  all  interests  and  should 
be  accomplished  as  soon  as  practicable."  Re- 


PROGRESS     AND     PLENTY  61 

solved,  "That  the  National  Board  of  Trade 
favors  the  adoption  of  a  currency  system 
which  will  be  based  upon  the  following  funda- 
mental principles  and  insure  the  following 
results : 

First — Be  absolutely  fair  to  all  interests  and 
to  all  localities. 

Second — Insure  at  all  times  an  adequate 
supply  of  properly  safeguarded  currency. 

Third — The  volume  of  said  currency  to  au- 
tomatically expand  and  contract  in  response 
to  the  normal  demands  of  the  manufacturing, 
commercial,  agricultural  and  other  legitimate 
interests  of  the  country. 

Fourth — Said  system  to  be  absolutely  free 
from  domination  or  control  by  political  or  any 
other  favored  interests. 

Resolved,  That  the  National  Board  of 
Trade  calls  upon  all  its  constituent  bodies  to 
carefully  study  the  fundamental  principles  of 
banking  and  currency,  in  order  to  intelligently 
aid  the  enactment  of  such  legislation  as  will 
best  conserve  the  interests  of  the  entire  coun- 
try." 

I  think  those  resolutions  the  best  I  ever  read. 
I  was  delighted  to  see  such  a  set  of  resolutions 
come  from  a  meeting  of  business  men.  My 
second  thought  was,  the  bankers  will  never 
allow  such  a  system  to  be  carried  out,  for  they 
have  had  control  of  the  currency  too  long  to 
give  it  up,  if  they  have  money  enough  to  pre- 


62  PROGRESS     AND     PLENTY 

vent  such  a  reform.  We  cannot  expect  them 
to  favor  anything  that  will  take  the  control  out 
of  their  hands.  On  reading  farther,  I  found 
that  the  pamphlet  proposed  the  formation  of  a 
National  Reserve  Association  composed  of  all 
the  banks,  and  that  the  bankers  were  to  co-op- 
erate, combine  and  retain  control  of  the  cur- 
rency. The  resolutions  were  a  joker.  The 
bankers  will  oppose  such  a  system.  Their  in- 
terests and  the  peoples'  interests  are  opposed. 
They  make  their  money  by  lending,  and  want 
interest  to  be  high,  which  depends  upon  money 
being  scarce,  while  it  is  to  the  interest  of  the 
common  people  to  have  money  plentiful,  and 
interest  low.  They  (the  people)  want  to  bor- 
row money  upon  terms  that  will  leave  a  large 
portion  of  what  they  produce  in  their  own 
hands.  They  want  just  such  a  money  system 
as  the  resolutions  call  for. 

The  National  Citizens'  League  proposes  to 
form  a  National  Reserve  Association  which  is 
to  be  a  co-operative  agency  for  all  the  banks. 
It  is  to  do  no  discounting  for  the  general  pub- 
lic, but  will  discount  the  paper  of  subscribing 
banks  at  a  uniform  rate.  It  is  to  be  a  bankers' 
bank,  which  will  treat  all  of  the  associated 
banks  alike,  and  will  enable  the  banks  to  get 
credits  or  money  on  better  terms  than  now. 
It  proposes  to  give  the  bankers  a  fair  system 
for  themselves,  but  to  leave  the  people  in  their 
power.  It  will  be  a  great  help  to  the  bankers 


PROGRESS     AND     PLENTY  63 

and  may  not  be  as  bad  as  the  present  system 
for  the  people.  But  it  is  nothing  like  the  sys- 
tem that  the  National  Board  of  Trade  resolu- 
tions call  for.  Up  to  a  certain  point  the  inter- 
ests of  all  the  people  are  alike,  they  all  want  to 
see  business  flourishing.  Even  pirates  like  to 
see  trade  brisk;  so  usurers  must  leave  the  peo- 
ple some  of  the  profits  of  their  industry  or  else 
they  will  kill  the  goose  that  lays  the  golden  egg, 
or  in  other  words,  paralyze  trade.  The  banks 
are  always  under  temptation  to  charge  too 
high  a  rate  of  interest  if  they  have  the  power. 
We  must  have  a  system  of  currency  that  will 
give  the  control  of  the  volume  of  money  in  cir- 
culation to  the  Government,  and  it  must  have 
a  fixed  principle,  and  rule  to  work  by,  or  we 
cannot  have  a  scientific  system.  The  present 
system  allows  financial  pirates  to  inflate  or 
contract  the  currency  at  pleasure,  and  that 
must  be  stopped.  Bankers  naturally  want  as 
large  a  share  as  possible  of  the  profits  of  busi- 
ness, and  what  they  get  lessens  the  profits  of 
their  customers,  consequently  a  system  that 
will  please  the  bankers  will  give  them  large 
profits,  and  will  not  be  in  the  interest  of  the 
rest  of  the  people.  Our  present  money  system 
is  so  bad  that  it  does  not  please  either  the  bank- 
ers or  the  business  community,  and  the  Na- 
tional Reserve  Association  may  be  better  for 
both  than  what  we  have,  but  it  is  not  the  best 
possible  plan  for  the  people,  by  a  long  way. 


64  PROGRESS     AND     PLENTY 

The  National  Citizens'  League  is  a  mis- 
nomer. If  it  is  not  controlled  by  the  bankers  it 
certainly  is  working  for  a  plan  that  will  give 
the  banks  too  much  power.  There  should  be  a 
real  citizens'  league  formed  to  advocate  a  plan 
that  will  harmonize  with  the  Board  of  Trade 
resolutions,  quoted. 

The  proposed  National  Reserve  Association 
would  give  the  banks  control  of  the  currency, 
which  is  contrary  to  the  resolutions,  and  would 
not  give  us  a  scientific  currency  that  would  ex- 
pand and  contract  automatically  with  the  re- 
quirements of  commerce. 

I  believe  that  the  principle  of  a  National  Re- 
serve is  sound,  but  that  the  Federal  Govern- 
ment instead  of  the  bankers  should  control  the 
reserve.  The  officials  who  issue  the  reserve 
must  have  strict  rules  to  guide  them;  they  must 
only  issue  money  when  the  good  of  the  country 
requires  it,  and  there  is  an  unfailing  sign  to 
guide  them.  The  unfailing  sign  is  the  rate  of 
interest. 


CHAPTER  VI 

SOME  PRINCIPLES  OF  MONEY 

I  consider  Alexander  Del  Mar  the  best  qual- 
ified teacher  of  the  science  of  money.  If  he  is 
not  so  considered  by  the  usurers  it  is  because 
he  has  told  things  that  they  do  not  want  people 
to  know.  He  was  a  teacher  of  Political  Econ- 
omy, but  became  disgusted  with  its  sophistries 
and  gave  it  up.  He  then  became  a  mining  en- 
gineer in  California.  He  made  some  discover- 
ies there  that  upset  the  theory  that  the  value 
of  gold  depended  upon  the  average  cost  of  its 
production,  and  he  saw  that  a  good  deal  of  the 
teaching  of  political  economy  in  regard  to 
money  was  false.  He  then  went  to  Europe  and 
spent  several  years  studying  the  history  of 
money  in  both  ancient  and  modern  times,  and 
wrote  several  books  on  both  the  history,  and 
the  science  of  money.  I  will  give  a  few  quota- 
tations  which  I  consider  the  cream  of  his  writ- 
ings. 

The  first  is  not  very  complimentary  to  writ- 
ers on  Political  Economy  as  taught  in  the 
schools.  He  says:  "It  should  be  remembered 
in  this  place  that  it  is  upon  these  same  acts  and 


66  PROGRESS     AND     PLENTY 

upon  these  acts  alone  that  rests  the  whole  mod- 
ern school  of  Political  Economy,  with  its  con- 
fused and  sophistical  arguments,  its  dismal  con- 
clusions, its  execrable  jargon,  and  its  unmeas- 
ured conceit  and  impudence.    Proceeding  upon 
the  obvious  postulate  that  exchange  is  neces- 
sary to  social  existence,  and  that  money  is  nec- 
essary to  exchange,  Political  Economy  falsely 
argues  that  money  is  and  must  be  a  commod- 
ity, and  ignorantly  and  impudently  assumes 
that  this  commodity  has  been,  is  being,  and 
must  be  valued  at  the  average  cost  of  its  cur- 
rent production,  assumptions  that  are  repudi- 
ated by  history,  and  belied  both  by  the  opera- 
tion of  mines,  and  the  everyday  transactions 
of  commerce.     Upon  this  rotten  foundation 
has  been  reared  a  tottering  superstructure  of 
sophistry,  which,   masquerading  through  the 
world  in  the  false  guise  of  science,  has  filled 
the  schools,  and  the  legislative  halls,  of  every 
modern  state  with  doctrines  which  bear  about 
the  same  relation  to  societary  life  that  medieval 
astrology  did  to  the  heavens."    He  says  of  the 
power  and  importance  of  money:  "Money  is 
perhaps  the  mightiest  engine  to  which  man 
may  lend  an  intelligent  guidance.     Unheard, 
unfelt,  unseen,  it  has  the  power  to  so  distribute 
the  burdens,  gratifications  and  opportunities  of 
life,  that  each  individual  shall  enjoy  that  share 
of  them  to  which  his  merit  or  good  fortune  may 
entitle  him,  or  contrariwise,  to  dispense  them 


PROGRESS     AND     PLENTY  67 

with  so  partial  a  hand  as  to  violate  every  prin- 
ciple of  justice  and  perpetuate  a  succession  of 
social  slaveries  to  the  end  of  time." 

Del  Mar  saw  the  effects  of  an  unjust  money 
system.    George  saw  the  iniquity  of  an  unjust 
land  system.     They  are  twin  evils  and  must 
hoth  be  abolished,  and  just  systems  substituted 
before  labor  will  secure  its  just  reward.    Again 
Del  Mar  says:  "Value  is  not  a  thing  nor  an 
attribute  of  things,  it  is  a  relation,  a  numerical 
relation    which    appears    in    exchange."      In 
speaking  of  what  the  value  of  money  depends 
on,  he  says:   "The  number  of  the   symbols 
(coins)  may  be  limited  but  rudely,  the  limit 
may  even — though  it  should  not — be  left  to 
the  chances  of  mining  discoveries,  still  repeated 
experiments  prove  that  it  is  the  number  of  the 
symbols  that  definitively  measures  values,  not 
the  quantity,  quality,  or  merit  of  the  materials 
of  which  they  may  be  composed.     A  ready 
proof  that  it  is  the  numbers  and  not  the  ma- 
terial of  money  which  measure  values  is  this: 
If  the  sum  or  integer  of  the  symbols  is  altered, 
so  will  be  the  expression  of  value  (price)  of  all 
things;  whereas  the  material  may  be  altered, 
e.  g.,  from  gold  to  silver,  or  from  both  to  un- 
convertible paper  without  at  all  affecting  the 
expression  of  value — provided  that  the  com- 
bined denominations  or  sum  and  legal  func- 
tions of  the  symbols  remain  unchanged.    These 
principles  of  money — namely,  that  money  is  a 


68  PROGRESS     AND     PLENTY 

measure  and  must  be  of  necessity  an  institute  of 
law,  that  the  Unit  of  Money  is  All  Money 
within  a  given  legal  jurisdiction,  that  the  prac- 
tical essence  of  money  is  limitation,  and  that 
coins  and  notes  alike  are  symbols  of  money; 
are  fully  discussed  and  illustrated  in  my  Sci- 
ence of  Money." 

He  says  of  free  coinage:  "The. Acts  of  1666, 
and  1679,  while  they  reserved  to  the  state  the 
unimportant  and  expensive  privilege  of  fab- 
ricating coins  and  making  good  their  loss  by 
abrasion,  robbed  it  of  that  most  essential  of  all 
prerogatives,  the  right  to  emit  the  coins  and  to 
stop  their  emission.  As  the  law  stands,  any- 
body may  hand  metal  into  the  mints  and  de- 
mand coins  for  it.  Anybody  may  emit  these 
coins  and  so  swell  the  volume  of  money  and 
measure  of  value,  anybody  may  deface  or  melt 
these  coins  and  so  curtail  the  measure  of  value, 
and  anybody  may  again  and  again  take  this 
same  metal  to  the  mints  and  alternately  mone- 
tise and  demonetise  it  till  the  end  of  time  and 
without  either  loss,  expense,  or  fear  of  punish- 
ment. Over  the  measures  of  length,  of  weight, 
of  liquid  volume,  etc.,  governments  exercise 
the  most  jealous  supervision.  In  each  case 
they  prescribe  a  specific  and  accurate  standard 
which  they  lock  up  and  carefully  guard  from 
alteration.  But  over  the  measure  of  value — 
which  is  far  more  important  than  all  the  others 
combined, — they  renounced  all  supervision 


PROGRESS     AND     PLENTY  69 

whatever,  from  the  moment  they  adopted  the 
English  mint  law  of  1666  or  the  French  mint 
law  of  1679 — in  other  words,  when  they  adopt- 
ed what  is  euphemistically  known  as  free  coin- 
age. Under  this  practice  the  unit  of  value — 
which  in  point  of  fact  is  not  one  coin,  but  all 
the  coins  and  notes  circulating  within  the  ter- 
ritory of  a  given  state — is  subjected  to  the 
hazards  of  mining,  the  legislation  of  foreign 
countries,  and  the  operations  of  intriguants, 
who  may  alter  it  whenever  it  suits  their  pur- 
poses. Free  coinage  does  not  deserve  the 
name  of  a  policy,  it  is  too  idiotic.  It  was 
adopted  at  the  best,  with  the  narrow  motive 
of  attracting  from  Spain  those  precious  metals 
which  she  had  discovered  and  endeavored  to 
monopolize,  but  which  even  without  this  legis- 
lation she  never  could  have  retained. 

The  tremendous  mischief  to  France  which 
followed  its  enactment  was  indeed  susceptible 
of  mitigation  by  means  of  paper  notes,  but 
these  paper  notes  were  unfortunately  emitted 
with  as  great  ignorance  of  the  necessity  of 
limiting  the  measure  of  value  as  had  charac- 
terized the  enactment  of  free  coinage  itself." 

I  will  quote  one  more  passage  from  "Money 
and  Civilization."  I  consider  it  the  most  im- 
portant passage  in  Del  Mar's  works. 

"He  showed  that  therefore  money  was  re- 
lated to  equity,  or  to  the  maintenance  of  equit- 
able relations  between  capitalists  and  labor- 


70  PROGRESS     AND     PLENTY 

ers;  that  like  other  measures  the  most  neces- 
sary arid  essential  characteristic  of  money  was 
scientific  limitation.  In  other  words,  that  to 
measure  with  precision  and  with  justice,  THE 
WHOLE  SUM  OF  MONEY  MUST  BE 
FIXED  AT  SOME  MORE  OR  LESS 
CONSTANT  RATIO  TO  THE  VOL- 
UME OF  EXCHANGES." 

That  is  the  most  important  fact  connected 
with  the  science  of  money;  and  it  is  because  I 
firmly  believe  that  I  can  show  how  the  whole 
volume  of  currency  can  be  fixed  at  a  constant 
ratio  to  the  volume  of  exchanges,  that  I  am 
writing  this  book. 

Several  people,  like  those  who  passed  the 
National  Board  of  Trade  resolutions,  have 
seen  that  a  system  of  currency  was  desirable 
that  would  expand  and  contract  automatically 
with  the  requirements  of  commerce,  but  I  have 
never  heard  of  a  plan  being  presented  that 
would  do  it. 

Rent  and  interest  being  so  much  alike  the 
thought  occurred  to  me  that  the  land  question 
and  the  money  question  might  be  settled  in 
much  the  same  way.  If  taking  rent  for  pub- 
lic purposes  would  settle  the  land  question  a 
scientific  solution  of  the  money  problem  might 
be  obtained  by  controlling  the  rate  of  interest. 


CHAPTER  VII. 

AN  AUTOMATIC  CURRENCY. 

The  resolutions  passed  by  the  National 
Board  of  Trade  call  for  a  currency  system 
that  will  be  absolutely  fair  to  all  interests  and 
to  all  localities,  give  at  all  times  an  adequate 
supply  of  properly  safeguarded  currency,  the 
volume  of  which  must  automatically  expand 
and  contract  with  the  normal  demands  of  the 
manufacturing,  commercial,  and  other  legiti- 
mate interests  of  the  country. 

Why  by  an  automatic  expansion  and  con- 
traction of  the  currency? 

There  can  only  be  one  answer  to  that  ques- 
tion. The  National  Board  of  Trade  must 
have  known  that  if  a  scientific  currency  was 
possible  it  must  expand  and  contract  auto- 
matically. When  there  is  a  legitimate  demand 
for  more  money  it  must  respond  to  the  de- 
mand. When  there  is  an  over  supply  it  must 
contract.  The  resolutions  give  no  hint  of  how 
to  establish  such  a  currency.  They  must  have 
thought  such  a  system  possible  as  they  were 
practical  men  and  would  not  ask  for  what 


72  PROGRESS     AND     PLENTY 

could  not  be  granted.  My  plan  is  the  only  one 
that  I  ever  heard  of  that  would  fully  comply 
with  that  demand,  though  of  course  there  may 
be  others.  There  is  an  infallible  sign  to  indi- 
cate when  more  money  is  required,  it  also  in- 
dicates when  less  is  required.  When  more 
money  is  needed  the  rate  of  interest  always 
rises,  and  when  the  currency  becomes  inflated, 
the  rate  of  interest  always  falls.  If  the  cur- 
rency was  always  kept  at  the  same  ratio  to  the 
volume  of  exchanges  the  rate  of  interest  would 
never  vary.  I  do  not  think  any  business  man 
will  dispute  these  facts. 

If  the  government  was  to  fix  on  a  certain 
rate  of  interest  as  the  most  desirable,  and  issue 
more  money  whenever  the  rate  rose  above  that 
rate  and  contract  the  currency  whenever  it 
fell  below  that  rate  we  would  have  a  currency 
that  would  have  almost  a  steady  value,  but  it 
would  not  be  automatic.  I  just  mention  that 
to  illustrate  the  principle.  There  is  a  better 
way. 

Interest  fluctuates  with  a  fluctuating  cur- 
rency and  it  stands  to  reason  that  if  we  had  a 
currency  that  never  fluctuated  in  value  the 
rate  of  interest  would  never  change.  It  is  a 
poor  rule  that  does  not  work  both  ways.  It 
would  be  hard  to  adapt  the  quantity  of  money 
in  circulation  to  the  demand  so  exactly  that 
interest  would  never  vary,  but  it  would  be  very 
easy  to  fix  the  rate  of  interest,  and  leave  the 


PROGRESS     AND     PLENTY  73 

amount  of  money  in  circulation  free  to  adapt 
itself  to  the  rate  of  interest. 

IT  CAN  BE  DONE.  It  can  be  done  in 
this  way.  The  government  coins  all  metallic 
money  and  prints  all  notes  as  it  is,  and  can 
easily  issue  it  in  sufficient  quantities  and  lend 
it  to  the  people  at  a  fixed  rate  of  interest  to 
all  who  wish  to  borrow,  and  have  acceptable 
security  to  offer.  It  can  loan  it  to  the  people 
directly,  or,  if  the  banks  would  act  as  agents 
and  handle  the  reserve  with  less  expense  than 
by  the  government  loaning  it  directly,  it  might 
be  done  in  that  way.  The  government  can  al- 
ways keep  a  sufficient  supply  of  printed  notes 
on  hand  to  supply  the  demand.  It  should 
issue  no  more  than  demanded  at  the  fixed  rate. 
Now  there  is  no  question  but  what  this  system 
would  furnish  plenty  of  money,  the  currency 
would  undoubtedly  expand  with  the  needs  of 
commerce.  But  how  about  contracting,  when 
less  money  was  required?  If  the  government 
did  not  interfere  with  private  loans  the  cur- 
rency would  also  contract  automatically.  All 
parties  who  had  money  to  loan  (except  the 
government)  would  compete,  and  interest 
would  fall  whenever  too  much  money  was 
circulating.  Government  reserves  would  not 
be  called  for,  but  money  would  be  borrowed  at 
lower  rates  of  interest  than  the  government 
rates  to  repay  the  government  loans.  The 
reserve  fund  would  really  be  issued  by  those 


74  PROGRESS     AND     PLENTY 

who  borrowed  it  and  would  only  be  called  for 
when  they  could  not  get  money  on  better  terms 
from  others. 

As  to  the  security,  it  would  not  do  to  be 
reckless.  Only  such  security  as  was  consid- 
ered undoubtedly  safe  should  be  taken  to  be- 
gin with.  But  it  is  to  the  advantage  of  the 
whole  country  that  every  one  should  be  en- 
abled to  employ  himself,  profitably  at  all 
times,  and  experiments  in  a  small  way  should 
be  made  to  find  how  far  we  could  go  towards 
supplying  every  one  with  a  working  capital. 

In  New  Zealand  the  government  loans 
money  to  settlers,  to  improve  their  land,  and 
to  farmers  to  start  co-operative  creameries, 
etc.  In  Denmark,  the  government — so  I  have 
heard— will  lend  a  small  amount  to  laborers  to 
enable  them  to  buy  a  few  acres  and  asks  no 
security  except  the  signatures  of  two  responsi- 
ble men  who  simply  vouch  for  the  character  of 
the  borrower.  If  such  experiments  have 
proved  successful  in  other  countries  they  prob- 
ably will  in  this.  Now  is  not  the  system  I  have 
presented  practical,  and  does  it  not  harmonize 
with  the  National  Board  of  Trade  resolutions? 
It  would  be  absolutely  fair  to  all  interests  and 
to  all  localities,  for  all  could  get  money  on  the 
same  terms.  It  would  provide  at  all  times  an 
adequate  supply  of  properly  safeguarded  cur- 
rency. The  security  and  the  interest  would 
safeguard  it,  for  no  one  would  offer  good 


PROGRESS     AND     PLENTY  75 

security  and  pay  interest  on  more  money  than 
he  needed,  or  borrow  from  the  government 
when  he  could  get  it  for  less  interest  from 
others.  It  would  expand  and  contract  auto- 
matically with  the  demand  of  trade.  The  sys- 
tem would  be  as  free  as  any  system  could  be 
from  domination  by  political  or  any  other 
favored  interests,  because  the  persons  in 
charge  of  the  currency  would  have  fixed  rules 
to  go  by. 

The  rate  of  interest  would  be  fixed  by  Con- 
gress and  would  seldom  if  ever  be  changed.  I 
offer  this  plan  to  the  National  Board  of  Trade 
and  to  all  others  interested  in  a  reformed  cur- 
rency, as  the  system  that  will  best  conserve 
the  interests  of  the  entire  country.  This  sys- 
tem would  not  only  give  us  the  kind  of  cur- 
rency the  Board  of  Trade  asks  for,  but  it  has 
other  advantages  besides.  It  would  furnish  a 
large  revenue  for  the  government  and  lower 
the  rate  of  interest  that  most  people  have  to 
pay.  It  would  do  what  no  usury  laws  have 
ever  done — prevent  interest  from  rising  above 
a  fixed  rate.  It  would  raise  wages,  for  it 
would  make  it  easier  for  laborers  to  get  capital 
and  employ  themselves,  and  in  that  way  les- 
sen competition  for  work.  In  fact  it  is  a  com- 
panion reform  to  the  taxation  of  land  values, 
and  as  a  source  of  public  revenue  has  every 
advantage  that  the  taxation  of  land  values 
would  have.  I  will  quote  a  passage  from 


76  PROGRESS     AND     PLENTY 

Progress  and  Poverty  that  applies  with  as 
much  force  to  my  proposed  reform  of  the  cur- 
rency as  to  the  taxation  of  land  values. 

"The  laws  of  the  universe  are  harmonious. 
And  if  the  remedy  to  which  we  have  been  led 
is  the  true  one,  it  must  be  consistent  with  jus- 
tice; it  must  be  practical  of  application;  it 
must  accord  with  the  tendencies  of  social  de- 
velopment, and  must  harmonize  with  other 
reforms." 

"All  this  I  propose  to  show.  I  propose  to 
meet  all  practical  objections  which  can  be 
raised,  and  to  show  that  this  simple  measure  is 
not  only  easy  of  application,  but  that  it  is  a 
sufficient  remedy  for  all  the  evils  which,  as 
modern  progress  goes  on,  arise  from  the 
greater  and  greater  inequality  in  the  distribu- 
tion of  wealth — that  it  will  substitute  equality 
for  inequality,  justice  for  injustice,  social 
strength  for  social  weakness,  and  will  open  the 
way  for  grander  and  nobler  advances  of 
civilization." 

There  is  one  statement  I  object  to  in  the 
above  quotation.  If  I  considered  a  tax  on 
land  values  a  sufficient  remedy  for  all  the  evils 
resulting  from  our  unjust  system  of  govern- 
ment, I  would  not  be  advocating  other  re- 
forms. I  do  think  that  the  taxation  of  land 
values,  and  a  scientific  system  of  currency  are 
the  two  most  important  reforms,  and  that 
when  we  get  those  two  we  will  have  a  better 


PROGRESS     AND     PLENTY  77 

government  than  any  nation  has  ever  enjoyed. 
But  as  we  progress  our  ideals  rise,  and  there 
will  still  be  plenty  of  work  for  reformers  for 
thousands  of  years,  after  all  the  reforms  for 
human  betterment  so  far  proposed,  have  been 
carried  out. 


CHAPTER    VIII. 

GOVERNMENT  CONTROL  OF  THE  CURRENCY. 

Democratic  governments  are  organized  to 
administer  public  affairs  in  such  a  way  that 
all  the  inhabitants  of  a  state  may  enjoy  as 
much  liberty  as  possible.  It  is  certainly  a 
function  of  government  to  provide  equitable 
institutions  and  prevent  injustice.  A  just 
distribution  of  wealth  depends  as  much  upon 
how  the  currency  is  issued  as  upon  any  one 
thing,  and  the  people  have  suffered  and  are 
still  suffering  from  a  miserable  money  system. 
Some  people  who  see  the  bribery  and  corrup- 
tion of  our  legislatures  favor  leaving  the  con- 
trol of  the  currency  in  the  hands  of  the  bank- 
ers. If  Congress  has  been  bribed  in  the  past 
to  favor  the  bankers  it  certainly  will  not  help 
matters  to  give  the  control  of  the  currency  to 
the  bribers  instead  of  the  bribed. 

I  have  just  received  the  last  issue  of  "Bank- 
ing Reform,"  a  monthly  paper  published  by 
"The  National  Citizens'  League  for  the  Pro- 
motion of  a  Sound  Banking  System,"  dated 
September  2,  1912.  It  criticizes  the  cur- 
rency plank  of  the  Progressive  Party,  in  an 
article  under  the  following  headlines:  "THE 


PROGRESS     AND     PLENTY  79 

ISSUE  OF  CURRENCY  IS  A  FUNC- 
TION OF  BANKING,  NOT  OF  THE 
GOVERNMENT." 

"Progressive  Party's  Monetary  Plank  Reflects  a  Popu- 
lar Misconception  Arising  from  Our  Unscientific  Banking 

System." 

I  am  not  an  admirer  of  Colonel  Roosevelt, 
nor  am  I  a  member  of  the  Progressive  Party, 
but  I  do  endorse  the  money  plank  criticized, 
and  I  think  I  can  show  that  the  argument 
against  the  Government  issuing  all  money 
would  not  apply  to  the  system  that  I  pro- 
pose. I  will  give  the  whole  article,  in  "in- 
stallments:" 

"The  currency  plank  of  the  Progressive  Party's  plat- 
form is  an  interesting  pronouncement,  because  it  was 
intended  to  reflect,  and  apparently  does  reflect,  the  trend 
of  untutored  public  sentiment  as  to  banking  reform. 
The  platform  says: 

"We  believe  the  present  method  of  issuing  notes 
through  private  agencies  is  harmful  and  unscientific. 
The  issue  of  currency  is  fundamentally  a  government 
function.' 

"One  inaccuracy  here  is  the  implication  that  the  pres- 
ent method  of  issuing  bank  notes  is  'harmful  and  un- 
scientific' because  it  is  done  'through  private  agencies,' 
that  is,  the  national  banks,  whereas  the  harm  and  lack 
of  science  are  due,  not  to  the  fact  that  the  issue  is 
through  private  agencies,  but  to  the  government's  in- 
terference with  the  note-issuing  functions  of  these 
private  agencies.  This  interference  has  been  carried 
beyond  the  point  of  supervision  or  regulation,  exercised 
in  the  interest  of  safety,  stability  and  justice  to  all,  to 
the  point  of  control  or  restriction  of  note  issues. 

"Another  inaccuracy  is  the  statement  that  'the  issue 
of  currency  is  fundamentally  a  government  function,' 
whereas  the  issue  of  currency  is  not  fundamentally  or 
exclusively  a  government  function  at  all.  It  is  a  bank- 
ing function." 


80  PROGRESS     AND     PLENTY 

It  is  generally  admitted  that  the  value  of 
money  depends  upon  its  limitation.  It  is  true 
that  no  currency  ever  issued  whether  privately 
or  by  government  has  ever  been  issued  scien- 
tifically, and  no  doubt  some  bad  effects  have 
been  caused  by  interference  with  banking  by 
the  government.  But  if  we  are  to  have  a  cur- 
rency fair  to  all  interests  it  must  be  controlled 
by  the  people's  representatives  and  not  by  any 
special  interest,  which  makes  a  profit  by  lend- 
ing money.  Even  in  this  paper  of  the  so-called 
Citizens'  League,  it  states:  "The  need  is  im- 
perative for  a  quasi-public  institution  to  hold 
the  final  banking  reserves  of  the  country." 
Why  quasi-public?  Give  the  banks  and 
usurers  full  control  and  we  will  have  a  worse 
state  of  affairs  than  they  have  in  any  country. 
No  one  would  think  of  giving  such  power  to 
any  set  of  men  who  make  their  wealth  by  loan- 
ing money.  The  government  must  have  full 
control  of  the  currency.  If  the  government 
is  liable  to  abuse  the  power  necessarily  en- 
trusted to  it,  the  remedy  is  to  give  the  people 
more  control  of  the  government.  The  people 
want  a  system  that  will  always  give  plenty  of 
money  of  steady  value  and  a  low  rate  of  in- 
terest. Such  a  system  will  not  suit  the  bank- 
ers and  it  will  not  do  to  give  the  power  to 
issue  money  to  a  class  whose  interests  conflict 
with  the  interests  of  the  people.  If  the  issue 
of  currency  is  a  function  of  banking  then  the 


PROGRESS     AND     PLENTY  81 

government  must  do  the  banking,  but  I  do  not 
consider  that  point  proved. 

"In  exercising  supervision  over  the  circulating  me- 
dium governments  have  usually  taken  account  of  the 
fact  that  banks  serve  a  commercial  purpose  and  are, 
therefore,  the  best  instruments  through  which  a  cir- 
culating medium  can  be  provided.  In  his  opinion  up- 
holding the  constitutionality  of  the  act  incorporating 
the  second  United  States  Bank,  Chief  Justice  Marshall 
said: 

"  'The  currency  which  it  circulates  by  means  of  its 
trade  with  individuals  is  believed  to  make  it  a  more 
fit  instrument  for  the  purposes  of  government  than  it 
could  otherwise  be.  *  "  The  court  has  already  stated 
its  conviction  that  without  this  capacity  to  trade  with 
the  individuals  the  bank  would  be  a  very  defective 
instrument  when  considered  with  a  single  view  to  its 
fitness  for  the  purposes  of  government.' 

"The  Progressive  platform's  statements  take  no  heed 
of  the  rule  that  'without  the  capacity  to  trade  with 
individuals  the  bank  wrould  be  a  very  defective  instru- 
ment.' If  the  government  undertakes  to  issue  cur- 
rency, but  has  no  capacity  'to  trade  with  individuals,' 
it  will  be  a  defective  instrument  for  that  purpose.  The 
capacity  to  trade  with  individuals  brings  banks  into 
touch  with  business,  makes  them  respond  to  the  de- 
mands of  business  and  therefore  gives  elasticity  to  their 
note  issues.  It  is  the  lack  of  capacity  to  trade  with 
individuals  which  forbids  the  government's  getting  into 
touch  with  business  or  learning  its  needs,  and  so  denies 
elasticity  to  government-issued  currency." 

The  government  has  the  capacity  to  trade 
with  individuals  if  necessary.  If  the  govern- 
ment can  collect  taxes  it  can  collect  interest. 

It  is  possible  for  the  government  to  control 
the  volume  of  money  in  circulation  without 
lending  directly  to  the  people.  It  can  lend 
directly  to  the  people  without  doing  a  general 
hanking  business,  as  it  is  only  necessary  for  it 
to  hold  the  reserve  and  issue  money  when 


82  PROGRESS     AND     PLENTY 

more  is  required,  which  will  be  when  there  is 
a  demand  for  money  at  the  government's  fixed 
rate  of  interest. 

But  if  the  choice  lies  between  the  govern- 
ment either  doing  the  whole  business  of  bank- 
ing, or  allowing  the  banks  to  issue  money  un- 
controlled by  the  government,  by  all  means 
let  us  have  government  banking. 

"Currency  issued  by  banks,  like  checks  and  drafts, 
is  created  by  the  transaction  which  gives  rise  to  the 
need  of  it.  Currency  issued  by  the  government  is  the 
product  of  an  arbitrary  ruling  by  Congress  or  of  an 
opinion  by  some  official  that  it  should  be  issued. 

"If  the  government  undertakes  to  issue  currency  to 
meet  the  demands  of  business,  the  government  must 
exercise  the  other  functions  of  banking— deposit  and 
discount.  It  must  accept  deposits  and  make  loans  to 
business  men  on  commercial  paper.  Except  the  Social- 
ists, those  who  thoughtlessly  advocate  government- 
issued  currency  make  no  proposal  that  the  government 
engage  in  general  banking. 

"The  most  glaring  inaccuracy  in  the  platform  pro- 
nouncement is  the  implication  that  an  efficient  means 
of  issuing  currency  is  the  solution  of  the  whole  mone- 
tary and  banking  problem.  This  view  is  so  commonly 
entertained  as  to  be  excusable.  There  has  been  frequent 
elucidation  in  this  journal  of  the  fact  that  elasticity 
of  bank  credit  is  the  question  of  fundamental  impor- 
tance. A  proper  reserve  system  underlies  this  problem. 
A  currency  that  will  expand  and  contract  automatically 
with  the  expansion  and  contraction  of  the  volume  of 
business  'is  only  a  part  of  the  problem.' " 

There  is  nothing  in  this  section  of  the  article 
to  show  that  the  issue  of  currency  is  not  a  gov- 
ernment function.  Currency  issued  by  the 
government  need  not  depend  upon  an  arbi- 
trary ruling  of  Congress.  It  can  be  issued  as 
I  have  pointed  out,  to  supply  the  demand  at  a 


PROGRESS     AND     PLENTY  83 

fixed  rate  of  interest,  or  it  could  be  issued  in 
harmony  with  the  multiple  standard,  only 
when  prices  were  rising.  According  to  the 
last  quotation  the  two  most  important  objects 
to  be  accomplished  by  a  reformed  currency, 
are  a  proper  reserve  system,  and  a  volume  of 
money  expanding  and  contracting  with  the 
requirements  of  commerce. 

The  plan  I  propose  will  supply  both  re- 
quirements and  it  will  not  matter  how  much 
or  how  little  gold  is  in  the  treasury,  it  will 
supply  as  much  and  only  as  much  money  as 
is  needed.  The  government  can  issue  the  re- 
serve without  exercising  the  other  functions  of 
banking — deposit  and  discount.  If  the  gov- 
ernment cannot  control  the  volume  of  cur- 
rency without  going  into  the  banking  business, 
by  all  means  let  it  undertake  banking;  but  I 
think  it  is  only  necessary  to  control  the  reserve, 
and  meddle  just  as  little  with  the  banks  as 
possible.  The  reserve  should  only  be  called 
on  when  the  rate  of  interest  reached  a  certain 
point,  and  that  point  should  not  be  high.  If 
the  banks  would  agree  to  loan  out  the  reserves 
when  needed  on  commission  they  might  be 
allowed  to  do  so.  As  long  as  they  had  private 
funds  to  loan  at  the  government  rate  or  less 
of  course  they  would  lend  them  first,  and 
when  they  ran  short  of  other  funds  they  would 
always  have  the  government  reserve  to  fall 
back  on.  Their  customers  would  know  that 


84  PROGRESS     AND     PLENTY 

they  could  always  get  a  loan  from  the  reserve 
at  the  government  rate,  and  that  would  pre- 
vent the  banks  from  asking  more  for  private 
loans.  If  the  banks  would  handle  the  reserves 
and  charge  the  government  a  small  commis- 
sion it  would  probably  be  the  cheapest  and 
easiest  way  to  issue  the  reserves,  but  I  do  not 
claim  to  be  an  expert  in  that  line.  If  my  pro- 
posal attracts  enough  attention  to  cause  dis- 
cussion, and  there  is  a  better  way,  it  will  likely 
be  brought  out. 

"In  his  speech  at  Providence,  Colonel  Roosevelt  elab- 
orated and  modified  the  platform  pronouncement. 
Again  was  a  popular  misapprehension  reflected  in  his 
remarks.  He  said: 

"  'We  must  have  a  currency  that  will  meet  the  re- 
quirements of  the  whole  country.  It  must  have  elas- 
ticity. It  must  be  absolutely  beyond  question  in  char- 
acter, ranking  with  the  best  in  the  world.  The  issue 
of  currency  should  be  a  government  function,  and 
therefore  the  currency  issue  should  every  dollar  be  as 
good  as  gold,  and  this  it  can  only  be  if  issued  against 
assets  so  good  that  the  general  business  sense  of  the 
community  will  unhesitatingly  accept  them  as  being  as 
good  as  gold.' 

"Here  are  singular  contradictions  and  inconsistencies 
and  both  singularly  in  accord  with  the  foggy  views  of 
the  public.  Perhaps  they  are  not  unnatural  considering 
the  country's  monetary  experiences  and  habits.  The 
demand  for  elasticity  is  repeated,  and  yet  there  is  a 
plea  for  government  issue  which  makes  elasticity  im- 
possible. 

"No  one  will  deny  the  general  truth  that  every  dol- 
lar of  currency  should  be  as  good  as  gold,  but  we  may 
question  the  soundness  of  the  implication  that  unless 
the  government  stamps  every  note  issued  with  its 
mark,  the  business  sense  of  the  community  will  reject 
it  as  having  a  value  less  than  gold." 


PROGRESS     AND     PLENTY  85 

There  are  neither  contradictions  nor  incon- 
sistencies in  the  quotation  from  Mr.  Roose- 
velt's speech.  The  government  can  issue  a 
currency  that  will  not  only  be  as  good  as  gold 
but  a  great  deal  better.  All  students  of  the 
money  question  admit  that  gold  fluctuates  in 
value  and  that  a  money  system  based  on  gold 
must  fluctuate  in  value  with  the  fluctuations 
in  the  value  of  gold.  Under  the  free  coinage 
system  money  does  not  measure  the  value  of 
gold,  but  the  quantity,  and  the  value  of  all 
other  commodities  as  compared  with  a  certain 
quantity  of  gold,  which  fluctuates  in  value  ac- 
cording to  supply  and  demand,  like  every 
other  article  of  commerce.  It  is  claimed  by 
the  advocates  of  a  gold  standard  that  the  value 
of  gold  does  not  change  very  much  because 
the  supply  of  gold  in  the  world  does  not 
change  very  fast.  While  that  is  true,  it  is  only 
one  half  of  the  truth.  The  demand  may  in- 
crease or  decrease  suddenly  and  that  will  af- 
fect the  value  of  gold  just  as  much  as  a  change 
in  the  supply.  Every  issue  of  silver  or  paper 
money  in  the  world  affects  the  value  of  gold. 
"The  fluctuations  of  money  escape  our  notice. 
Our  whole  education  leads  us  to  look  at  the 
dollar  as  absolutely  invariable.  It  is  like  the 
earth.  We  do  not  see  it  move.  The  sun  and 
stars  appear  to  move  around  the  world,  and 
commodities  appear  to  move  while  gold  stands 
still;  whereas  in  both  cases  the  actual  fact  is 


86  PROGRESS     AND     PLENTY 

the  reverse  of  appearances." — (Prof.  S.  New- 
comb). 

What  makes  the  value  of  gold  appear  to 
remain  steady  is  making  the  dollar  a  measure 
of  quantity  for  gold.  If  gold  was  demonitized 
and  every  coin  replaced  by  a  paper  note  of  the 
same  denomination,  prices  would  not  change, 
and  if  at  the  same  time  the  United  States 
made  the  current  rate  of  interest  permanent 
by  supplying  the  demand  for  money  at  that 
rate,  the  average  price  of  commodities  would 
remain  steady.  The  fluctuations  in  the  value 
of  gold  would  then  be  measured  by  money  the 
same  as  changes  in  the  value  of  other  goods. 
When  that  is  done  every  dollar  in  circulation 
will  be  much  better  than  gold,  for  it  will  have 
a  steady  purchasing  power  and  measure  the 
value  of  all  commodities,  including  gold,  with 
precision,  which  is  something  that  gold  money 
has  never  done. 

"This  seems  to  be  another  reflection  of  a  popular  no- 
tion, due  entirely  to  habits  of  thought  produced  by  an 
unscientific  and  defective  monetary  system.  We  have 
all  been  taught  from  the  cradle  that  the  government's 
credit  and  the  government's  promises  are  of  a  superior 
order.  Government  bonds  are  customarily  regarded  as 
of  higher  quality  than  other  evidences  of  debt.  As  a 
matter  of  fact,  government  bonds  have  no  peculiar 
standing  so  far  as  their  own  merits  are  concerned. 
They  have  been  given  a  fictional  value  that  has  noth- 
ing in  particular  to  do  with  the  government's  power 
to  pay.  They  do  not  stand  on  their  own  merits  as 
investments.  They  represent  a  measure  of  monopoly. 
Their  ownership  by  a  national  bank  carries  with  it  not 
only  the  privilege  of  note  issue  against  them  as  secur- 


PROGRESS     AND     PLENTY  87 

ity,  but  national  banks  are  required  by  law  to  invest 
a  certain  percentage  of  their  capital  in  interest-bearing 
government  bonds.  Over  80  per  cent  of  the  govern- 
ment's interest-bearing  debt  is  in  the  form  of  bonds 
owned  by  national  banks  and  deposited  with  the  United 
States  Treasurer  as  security  for  circulation  and  deposits 
of  public  money. 

"A  market  for  the  bonds  was  made  by  law.  Purchase 
of  the  bonds  carries  with  it  a  monopoly  of  note  issue.  In 
this  way  the  bonds  are  given  a  value  that  is  fictional. 
The  proposal  of  the  National  Monetary  Commission  to 
retire  national  bank  notes  uncovered  the  fiction,  or 
made  it  more  emphatic.  It  raised  the  question  of  how 
the  privilege  bond  ownership  carried  could  be  de- 
stroyed without  causing  great  loss  to  the  bond  owners. 
It  is  admitted  that  these  bonds,  if  marketed  on  their 
investment  desirability,  would  sell  down  to  about  70. 
The  withdrawal  of  the  circulation  privilege  and  com- 
pulsory investment  in  them  by  national  banks  would 
involve  a  loss  of  at  least  30  per  cent  to  the  present 
owners  of  the  bonds,  or  it  would  necessitate  refund- 
ing by  the  government  at  a  higher  rate  of  interest,  and 
so  cause  a  corresponding  loss  to  the  government 

"Government  bonds  have  no  special  or  even  senti- 
mental value  as  compared  with  other  bonds.  'As  good 
as  a  government  bond'  is  an  empty  expression.  Eng- 
land's credit  is  as  good  as  that  of  the  United  States. 
English  consols,  bearing  2%  per  cent  interest,  are  now 
selling  around  75.  Germany's  credit  is  as  good  as  that 
of  the  United  States.  German  Imperial  3s  are  selling 
around  79.  The  credit  of  France  is  of  the  highest  class. 
French  rentes,  bearing  3  per  cent  interest,  are  selling 
around  93.  But  none  of  them  carries  the  circulation 
privilege  and  in  none  of  them  are  the  banks  of  those 
countries  compelled  to  invest  part  of  their  capital. 
European  bankers  are  better  pleased  to  hold  bankers' 
bills  arising  out  of  commercial  transactions.  Such 
security  is  held  superior  to  that  of  British,  French  or 
German  bonds  in  desirability  for  banking  purposes  and 
in  convertibility  into  cash.  United  States  bonds,  mar- 
keted on  their  merits,  might  sell  as  low  as  60,  and  the 
fact  that  they  are  government  obligations  does  not  dis- 
proportionately increase  their  desirability  for  invest- 
ment purposes.  In  short,  'the  business  sense  of  the 
community'  will  not  unhesitatingly  accept  them  as  be- 


88  PROGRESS     AND     PLENTY 

ing  as  good  as  gold.  The  business  sense  of  the  com- 
munity accepts  government  bonds  at  a  valuation  fixed 
by  their  investment  desirability. 

"There  are  still  a  few  countries  in  which  currency 
is  issued  by  the  government.  Russia  is  one.  Probably 
San  Domingo,  Nicaragua,  Venezuela  and  their  neigh- 
bors have  well-oiled  printing  presses  which  turn  out 
currency  as  the  exigencies  of  the  dictators  demand. 
But  the  financial  experience  of  stable  governments  has 
taught  that  the  business  sense  of  the  community  will 
unhesitatingly  accept  currency  as  equal  in  value  to 
gold  only  when,  in  addition  to  a  reserve  of  gold  behind 
it,  there  is  liquid  commercial  paper.  Commercial  paper, 
which  evidences  the  existence  of  goods  in  process  of 
transfer  from  producer  to  consumer,  is  the  highest 
type  of  security  when  there  is  at  hand  some  means  of 
converting  it  into  gold  or  an  equivalent.  Such  paper  is 
secured  by  the  necessities  of  the  consumer  and  the 
capacity  of  the  consumer  to  pay.  If  it  can  be  made  a 
live  asset,  that  is,  if  a  means  for  rediscounting  it  can 
be  provided,  it  is  the  security  which  the  business  sense 
of  the  community  unhesitatingly  accepts  as  equal  to 
gold.  If  currency  is  issued  against  such  assets  under 
a  banking  system  scientifically  devised,  the  currency 
is  as  good  as  gold,  and  it  is  the  only  kind  that  is  so 
accepted.  It  is  the  only  kind  that  is  elastic,  because 
it  is  the  only  kind  that  in  its  fluctuations  keeps  exact 
step  with  the  fluctuations  in  the  volume  of  business. 
It  is  necessarily  issued  by  a  bank  because  only  banks 
Rave  such  assets.  When  government  does  anything  but 
devise  the  system,  regulate  its  operation  and  exercise 
supervision  in  the  interest  of  safety  and  equity,  it  de- 
feats the  purpose  which  currency  issues  are  designed 
to  serve." 


Michael  Flurschiem,  speaking  of  National 
Banks,  says:  "A  special  institution  of  this 
country  organized  on  the  plan  of  keeping  your 
pudding  and  still  eating  it.  These  banks  de- 
posit in  the  United  States  Treasury,  bonds 
whose  interest  they  pocket,  and  on  the 


PROGRESS     AND     PLENTY  89 

strength  of  these  bonds  they  obtain  money, 
almost  interest  free,  which  they  lend  out  at 
high  interest."  A  nice  institution  for  the  peo- 
ple to  uphold,  is  it  not?  Is  it  not  about  time 
to  do  away  with  the  National  banks?  I  can 
see  no  great  obstacle  in  the  way  of  abolishing 
their  special  privileges-  The  U.  S.  govern- 
ment can  either  issue  notes  and  redeem  the 
bonds  at  par  and  require  the  National  Banks 
to  redeem  their  notes ;  or,  what  would  be  bet- 
ter, the  government  could  call  in  the  National 
bank  notes  and  replace  them  with  its  own 
notes.  When  that  is  done  the  bonds  are  paid 
for,  unless  the  National  bank  notes  in  circula- 
tion do  not  equal  the  amount  of  the  bonds. 
In  that  case  of  course  the  government  should 
pay  for  the  bonds  that  exceeded  the  notes. 
National  bank  notes  do  not  represent  wealth 
earned  by  any  one.  The  government  simply 
gave  the  National  banks  the  privilege  of  is- 
suing these  notes  on  condition  that  they  buy 
the  bonds.  When  the  government  printed  the 
National  bank  notes  and  turned  them  over  to 
the  National  banks  it  really  paid  them  for  the 
bonds  although  it  continued  to  pay  interest  on 
the  bonds.  It  can  either  cancel  the  bonds  and 
redeem  the  notes,  or  it  can  cancel  the  notes 
and  redeem  the  bonds.  There  is  no  reason 
why  it  should  be  required  to  redeem  both 
notes  and  bonds.  It  will  not  inflate  the  cur- 
rency in  the  least  to  replace  the  National  bank 


90  PROGRESS     AND     PLENTY 

notes  with  government  notes,  and  it  will  re- 
imburse the  National  banks  for  all  the  capital 
they  invested  in  government  bonds. 

The  system  of  currency   I   propose   would 
supply  the  country  with  just  such  a  currency 
as  the  country  needs,   and   is   just   what   the 
National  Citizens'  League  is  working  for,  ex- 
cept that  the  amount  of  money  issued  would 
be  controlled  by  the  government  instead  of  by 
the  banks.    It  would  be  secured  "by  the  neces- 
sities of  the  consumer,  and  the  capacity  of  the 
consumer  to  pay."     It   would   have   the   best 
possible  backing — a  steady  purchasing  power. 
It  would  buy  gold  as  it  would  buy  everything 
else  at  its  market  value,    established    by    the 
higgling  of  the  market,  and  be  of  a  far  steadier 
value  than  any  currency  based  upon  the  gold 
standard.     I  do  not  think   it   likely   that   the 
gold  standard  will  be  given  up  very  soon,  as 
so  many  people  still  have  the  gold  worshiping 
superstition.    But  the  plan  I  propose  could  be 
carried  out  without  even  repealing   the    free 
coinage  law,  unless  great   quantities   of   gold 
were  discovered.     In  that  case,    free   coinage 
would  have  to  be  stopped,    or   the   value    of 
money  would  fall  with  the  value  of  gold,  no 
matter  what  system  we  have.    I  object  to  the 
statement  in  the  last  quotation  that:   "When 
government  does  anything  but  devise  the  sys- 
tem, regulate  its  operation  and  exercise  super- 
vision in  the  interest  of  safety  and  equity,  it 


PROGRESS     AND     PLENTY  91 

defeats  the  purpose  which  currency  issues  are 
designed  to  serve." 

The  government  cannot  "exercise  super- 
vision in  the  interest  of  safety  and  equity" 
without  retaining  the  power  to  issue  money 
when  it  is  needed  and  stop  its  issue  when  there 
is  enough  in  circulation.  But  if  the  govern- 
ment will  give  us  an  automatic  self-regulating 
currency  as  I  propose,  it  can  leave  the  banks 
to  manage  their  own  affairs  with  very  little 
interference. 

Del  Mar  makes  it  quite  clear  that  in  order 
to  regulate  the  measuring  quality  of  money, 
the  government  must  regulate  the  issue,  and 
issue  enough  to  keep  prices  from  fluctuating, 
and  this  is  the  most  important  function  in  re- 
gard to  money  that  the  government  has  to 
exercise;  as  the  unit  of  value  is  not  a  certain 
coin  but  all  the  money  circulating  within  the 
jurisdiction  of  the  government. 

When  we  consider  some  of  the  idiotic  regu- 
lations the  government  has  made  with  regard 
to  money,  and  especially  in  regard  to  the  gold 
reserve,  it  is  not  to  be  wondered  at  that  some 
people  object  to  giving  it  the  responsibility  of 
regulating  the  currency.  Here  is  a  quotation 
from  Banking  Reform  that  reminds  me  of  the 
old  lady  who  starved  to  death  with  thousands 
of  dollars  put  away  for  safe  keeping  which  she 
had  not  sense  enough  to  use : 

"George  E.  Roberts,  Director  of  the  Mint, 


92  PROGRESS     AND     PLENTY 

pointed  out  in  a  recent  speech  that  during  the 
panic  of  1907  the  United  States  had  to  borrow 
gold  from  England,  although  this  government 
at  the  time  had  about  six  times  as  much  gold 
as  the  Bank  of  England  had.  He  said  in  part : 

'  'No  wonder  the  London  Economist,  re- 
viewing the  record  in  its  number  of  March  1, 
1908,  said :  "The  crisis  showed,  much  to  the  re- 
lief of  experienced  bankers,  that  the  raising  of 
the  bank  rate  is  as  effective  a  device  as  ever  it 
was,  in  attracting  gold." 

'  'It  is  a  humiliating  record  for  us  and  a 
convincing  proof  of  the  inferiority  of  our  re- 
serve system  that  the  Bank  of  England,  carry- 
ing a  reserve  of  only  $150,000,000  for  all 
the  bank  credits  of  England,  was  able  to 
furnish  relief  to  the  United  States,  which  held 
a  reserve  of  over  $900,000,000  in  government 
vaults  and  more  than  that  scattered  in  banks. 
That  is  the  superiority  of  a  consolidated  bank- 
ing reserve  over  a  government  reserve,  which 
belongs  to  nobody  in  particular,  plus  banking 
reserves  which  the  banks  dare  not  use. 

"  'In  a  crude  and  costly  way,  by  the  blind 
operation  of  events,  the  same  influences  are 
eventually  set  in  motion  with  us  which  else- 
where are  scientifically  directed.  Where  we 
set  out  to  acquire  gold  we  can  get  it  by  the 
sheer  weight  of  our  resources  and  the  sacrifices 
we  are  able  to  make.  When  all  the  banks  in 
the  United  States  are  "loaned  up"  tight  the 


PROGRESS     AND     PLENTY  93 

expansion  of  credits  is  stopped ;  sometimes  the 
process  seems  a  little  abrupt,  but  we  have 
never  had  any  other  way,  and  we  are  like 
the  old  lady  who  took  her  first  railroad  trip  on 
a  train  that  was  wrecked,  and  supposed  they 
always  stopped  the  trains  that  way.' ' 

It  is  a  good  thing  that  there  was  some  mate- 
rial in  the  world  that  was  available  to  make 
money  out  of  or  we  would  have  had  to  return 
to  barter.  If  all  the  gold  in  the  world  had 
been  in  the  treasury  and  Congress  kept  it 
there  it  would  not  have  relieved  the  situation. 
And  if  there  had  not  been  a  single  ounce  of 
gold  in  the  treasury,  but  plenty  of  either  gold 
or  paper  money  in  circulation,  there  would 
have  been  no  crisis.  The  only  reserve  the 
country  needs  is  to  reserve  the  right  to  stop 
the  issue  of  money  when  prices  generally  are 
rising  and  interest  falling,  and  to  issue  money 
when  prices  are  falling  and  interest  rising. 


CHAPTER  IX. 

THE  MULTIPLE  STANDARD. 

One  thing  I  like  about  the  discussion  of  the 
money  question  going  on  at  present,  is  that 
there  are  fewer  disputes  in  regard  to  the  prin- 
ciples of  money  than  formerly.  If  a  plan  is 
proposed  to  reform  our  money  system  that 
harmonizes  with  these  principles  it  will  be 
more  difficult  than  ever  before  for  those  seek- 
ing special  privileges  to  make  a  plausible  de- 
mand for  them.  The  bankers  and  economic 
writers  have  admitted  so  much  that  is  true  in 
regard  to  the  principles  of  money  that  they 
are  going  to  find  it  pretty  hard  to  make  a 
strong  argument  against  a  plan  that  will  be 
fair  to  all,  if  it  also  harmonizes  with  economic 
principles.  Michael  Flurschiem  has  written 
several  books  on  economic  subjects,  and  has 
also  had  practical  experience  in  banking  and 
commerce.  He  is  widely  known  as  a  reformer 
and  advocate  of  the  multiple  standard  of  value 
for  money.  I  am  going  to  give  some  quota- 
tions from  his  book  "The  Economic  and  Social 
Problem,"  for  I  think  that  what  he  has  writ- 
ten supports  my  plan  for  a  scientific  money 
system.  My  plan  is  much  the  simplest,  but 


PROGRESS     AND     PLENTY  95 

they  are  both  founded  on  the  same  principles, 
and  either  plan  would  give  us  a  better  system 
than    any    country    possesses.      He    quotes 
Ricardo  as  saying:  "The    whole    charge    for 
paper  money  may  be  considered  as  seignior- 
age.   Though  it  has  no  intrinsic  value,  yet  by 
limiting  its  quantity,  its  value  in  exchange  is 
as  great  as  an  equal  denomination  of  coin  or 
of  bullion  in  the  coin.    It  is  not  necessary  that 
paper  money  should  be  payable  in  specie  to 
secure  its  value,  it  is  only  necessary  that  its 
quantity  should  be  regulated."  ......    "A 

regulated  paper  currency  is  so  great  an  im- 
provement in  commerce  that  I  should  greatly 
regret  if  prejudice  should  induce  us  to  return 
to  a  system  of  less  utility." 

"The  introduction  of  the  precious  metals  for 
the  purposes  of  money  may  with  truth  be  con- 
sidered as  one  of  the  most  important  steps  to- 
wards the  improvement  of  commerce  and  the 
arts  of  civilized  life.  But  it  is  no  less  true  that 
with  the  advancement  of  knowledge  and 
finance  we  discover  that  it  would  be  another 
improvement  to  banish  them  again  from  the 
employment  to  which,  during  the  less  enlight- 
ened period,  they  have  been  so  advantageously 
applied.  John  Ruskin  says:  "The  use  of  sub- 
stances of  intrinsic  value  as  the  material  of  a 
currency  is  a  barbarism,  a  remnant  of  the  con- 
ditions of  barter,  which  alone  renders  com- 
merce possible  among  savages." 


96  PROGRESS     AND     PLENTY 

"There  is  only  one  way  to  find  the  value  of 
money:  It  is  to  obtain  the  prices  of  goods  and 
services.  In  other  words,  the  value  of  money 
is  its  purchasing  power.  There  is  no  other 
gauge;  just  as  money  measures  the  value  of 
merchandise,  so  merchandise  measures  the 
value  of  money." 

"The  relation  between  the  quantity  of 
money  offered  for  goods  and  the  quantity  of 
goods  supplied  for  money — in  other  words,  the 
law  of  supply  and  demand — determines  not 
only  the  price  of  goods,  but  also,  at  the  same 
time,  the  price  or  the  value  of  money." 

"Can  we  blame  the  gold  fanatics  if  they  stick 
to  their  gold  standard  as  long  as  experience 
justifies  them  in  the  belief  that  gold,  with  all 
its  fluctuations  of  value,  is  after  all  not  subject 
to  such  excesses  in  this  direction  as  most  of  the 
paper  currencies  on  record?  But  they  leave 
out  of  sight  the  fact  that  not  a  single  case  is 
known  in  modern  history  where  an  inconvert- 
ible paper  money  was  issued  under  normal 
conditions,  for  the  purpose  of  providing  a 
better  money  than  metal  coins.  Invariably 
such  money  was  issued  in  times  of  wars  or 
revolutions,  or  at  least  as  the  result  of  acute 
financial  distress.  Under  such  conditions  it 
could  hardly  be  expected  that  the  issue  would 
conform  to  rules  adapted  to  maintain  a  fixed 
standard  of  value  for  the  paper,  which  in  no 
way  proves  that  such  rules  might  not  be 


PROGRESS     AND     PLENTY  97 

devised.  On  the  contrary,  a  closer  investiga- 
tion will  show  us  the  feasibility.  A  perfect 
standard  of  value  for  money  is  reached  when 
the  average  price  of  merchandise  does  not 
vary,  and  this  can  only  be  obtained  where  the 
quantity  of  the  money  supply  in  the  market 
adapts  itself  to  the  demands  of  the  market; 
where  more  money  appears  when  prices  tend 
to  go  down,  and  where  the  surplus  disappears 
when  the  tendency  is  in  an  upward  direction. 
This  is  impossible  in  the  case  of  metal  money, 
whose  supply  depends  on  the  good  will  of 
those  who  control  the  bullion  market;  but  it 
is  within  the  reach  of  possibility  in  the  case  of 
paper  money,  which  can  be  supplied  to  any 
amount  at  the  shortest  notice,  whose  issue  can 
be  adapted  to  the  market's  exigencies,  more 
money  being  issued  when  prices  fall,  and 
money  being  retired  when  prices  rise.  Thus, 
while  our  present  law  fixes  the  price  of  gold, 
the  new  task  is  to  fix  the  average  price  of 
goods  through  a  regulation  of  the  money 
circulation." 

I  think  this  plan  practicable,  but  that  to 
supply  the  demand  at  a  fixed  rate  of  interest 
would  bring  about  the  same  result  automat- 
ically and  save  the  work  of  a  corps  of  statisti- 
cians. Flurschiem  would  try  to  keep  prices 
from  fluctuating  by  the  government  keeping 
"A  small  corps  of  statisticians  who  would  re- 
ceive and  tabulate  the  current  market  prices 


PROGRESS     AND     PLENTY 

for  each  day.  When  they  found  that  prices 
were  f  jailing,  they  would  lower  the  rate  of  in- 
terest, more  money  would  be  borrowed  and 
prices  would  rise.  On  the  other  hand  if  they 
found  that  prices  were  rising,  they  would  raise 
the  rate  of  interest,  less  money  would  be  bor- 
rowed, the  currency  would  soon  contract  and 
prices  fall." 

I  think  all  who  have  made  a  study  of  the 
money  question  will  agree  that  the  theory  of 
the  above  plan  is  sound.  I  find  no  fault  with 
the  principles  of  Mr.  Flurschiem's  plan,  but  I 
think  there  is  a  better  way  of  carrying  them 
out.  If  raising  the  rate  of  interest  causes  less 
money  to  be  borrowed  and  prices  to  fall,  and 
if  lowering  the  rate  of  interest  causes  more 
money  to  be  borrowed  and  prices  to  rise,  we 
can  prevent  prices  from  either  rising  or  falling 
by  fixing  on  a  permanent  rate  of  interest  and 
supplying  the  demand  at  that  rate  as  I  have 
pointed  out.  My  plan  seems  to  me  to  be  the 
only  really  scientific  plan  that  has  ever  been 
proposed.  If  no  more  money  was  ever  issued 
than  enough  to  supply  the  needs  of  commerce 
at  present  prices,  interest  would  never  fall, 
nor  the  average  price  of  goods  rise.  Interest 
only  rises  when  more  money  is  needed,  and  is 
not  forthcoming,  and  only  falls  when  less 
money  is  required  to  maintain  the  average 
price  of  all  things  unchanged.  If  that  is  the 
case,  and  if  the  government  supplied  the  de- 


PROGRESS     AND     PLENTY  99 

mand  of  solvent  people  for  money  at  the  cur- 
rent rate  of  interest,  money  could  never  get 
any  scarcer,  and  the  average  price  of  goods 
could  never  rise.  When  less  money  was  re- 
quired than  what  was  in  circulation  there 
would  be  people  with  money  on  hand  which 
they  could  not  invest  at  the  government  rate, 
and  who  would  offer  to  take  less.  As  long  as 
money  could  be  borrowed  for  less  than  the 
government  rate  government  loans  would  not 
be  called  for,  but  the  cheaper  money  would  be 
borrowed  to  return  the  government  loans. 
With  this  system  in  operation  government 
loans  would  only  be  called  for  when  more 
money  was  really  needed,  and  in  that  case  it 
would  always  be  forthcoming  in  sufficient 
quantities.  Instead  of  watching  prices  and 
raising  and  lowering  interest,  as  prices  fell  or 
rose,  I  would  simply  supply  the  demand  at  a 
fixed  rate  of  interest,  knowing  that  if  that  was 
done  prices  would  remain  steady  without  look- 
ing after. 


CHAPTER   X. 

DIRECT  LEGISLATION. 

Of  all  proposed  reforms,  the  most  important 
and  the  most  popular  is  the  demand  for  direct 
legislation,  or  the  Initiative,  Referendum  and 
Recall.  These  three  measures  will  enable  the 
people  to  propose  any  law  they  want  enacted, 
and  have  it  referred  to  a  vote  of  the  people. 
The  people  can  initiate  good  laws  and  repeal 
had  laws  and  recall  any  public  official  who  is 
false  to  his  trust.  In  order  that  the  people 
may  become  self-governing  it  is  necessary  that 
they  have  the  power  to  propose  any  law  they 
wish.  It  is  also  necessary  that  if  the  legisla- 
ture refuses  to  pass  a  law  that  the  people  can 
have  a  chance  to  pass  on  it  themselves,  that  is : 
have  the  law  referred  to  a  direct  vote  of  the 
people.  In  that  way  they  can  not  only  get  the 
reforms  they  want,  but  repeal  laws  which  they 
do  not  want. 

The  Initiative  gives  the  citizens  the  right  to 
have  any  desired  reform  measure  brought  be- 
fore the  legislature  upon  presenting  a  petition 
from  a  certain  percentage  of  the  voters. 

The  Referendum  requires  the  legislature  to 


PROGRESS     AND     PLl'NTY 

submit  any  bill  demanded  by  petition  of  a  cer- 
tain percentage  of  the  people,  to  a  direct  vote. 
It  gives  the  people  the  power  to  veto  any  act 
of  the  legislature,  or  to  enact  any  law  they 
want  in  spite  of  the  legislature,  as  any  bill 
submitted  to  a  vote  of  the  people  becomes  a 
law  if  a  majority  of  the  votes  are  in  its  favor. 
Fourteen  states  have  already  passed  bills  nom- 
inally giving  the  citizens  these  reforms,  but 
only  seven  of  them  have  passed  bills  that  are 
of  any  practical  use.  I  will  quote  some  pas- 
sages from  "Equity,"  a  little  magazine  pub- 
lished in  the  interest  of  Direct  Legislation,  to 
show  what  the  enemies  of  Direct  Legislation 
are  doing  to  prevent  the  rule  of  the  people. 
There  are  "seven  states  which  will  vote  this 
fall  upon  the  adoption  of  an  initiative  and 
referendum  system  which  has  been  submitted 
to  them.  SLv  will  vote  on  amendments  which 
have  wicked  jokers,  are  incomplete,  or  are 

worse  than  nothing The  real  fight  from 

now  on  will  be  to  get  workable  amendments/' 

Here  are  some  of  the  jokers  which  the  op- 
ponents of  direct  legislation  are  getting  into 
the  amendments  to  make  them  impracticable: 

"Here,  briefly  stated,  are  the  principal 
*  jokers'  which  have  been  found  to  render  in- 
effective the  Initiative  and  Referendum  in 
those  states  where  they  have  been  in  use.  This 
article  is  intended  to  put  students  and  workers 
for  Direct  Legislation  on  their  guard  against 


102  PSCimESS     AND     PLENTY 

the  plausible  talk  about  *  safeguards  and  re- 
strictions.' Every  'joker'  has  for  its  object 
the  limitation  of  the  power  of  the  voters  in 
legislation.  We  must  expect  this  sort  of  thing 
from  the  politicians,  but  there  is  no  excuse  for 
the  friends  of  Direct  Legislation  falling  into 
traps  set  under  the  specious  plea  of  'protecting 
the  Initiative  and  Referendum  from  being 
abused.' 

"  JOKER  No.  1. — Limiting  the  Initiative  to 
statute  laws  and  prohibiting  the  voters  from 
proposing  and  adopting  amendments  to  the 
state  constitution. 

"The  Constitutional  Initiative  is  the  most 
vital  part  of  any  amendment.  It  is  denied  to 
the  people  of  South  Dakota,  Utah,  Montana 
and  Maine.  Also,  it  is  omitted  from  the 
amendments  proposed  in  Washington  and 
Idaho. 

" JOKER  No.  2. — To  require  an  improbable 
or  impossible  majority  necessary  to  enact  or 
reject  measures  submitted  to  the  voters. 

"Oklahoma  requires  a  'majority  of  all  votes 
cast  in  said  election'  necessary  to  enact  any 
measure  submitted  either  by  the  legislature  or 
by  Initiative  petition.  No  measure  submitted 
at  a  regular  election  since  1907  has  been 
adopted,  although  five  important  ones  did 
receive  a  large  majority  of  the  votes  cast 
'thereon.'  Twelve  states  have  for  years  had 
this  requirement  for  the  adoption  of  constitu- 


PROGRESS     AND     PLENTY  103 

tional  amendments,  and  in  those  states  it  has 
been  found  practically  impossible  to  change 
the  constitution,  no  matter  how  necessary* 
Every  measure  voted  on  should  be  decided  by 
the  votes  cast  thereon. 

"JOKER  No.  3. — To  require  large  petitions, 
or  to  render  it  difficult  to  secure  them,,  no  mat- 
ter what  per  cent  is  required. 

"The  proposed  Wyoming  amendment  re- 
quires 25%  petitions,  which  is  absurd.  Mon- 
tana has  the  standard  percents,  5  for  the  Ref- 
erendum, 8  for  the  Initiative.  But  to  suspend 
the  operation  of  a  law  until  the  vote  is  taken,  a 
Referendum  petition  must  be  signed  by  15% 
of  the  voters  in  a  majority  of  the  counties. 
For  other  petitions  it  is  provided  that  'two- 
fifths  of  the  whole  number  of  counties  of  the 
state'  must  furnish  as  signers  of  said  petition 
the  required  per  cent  of  the  legal  voters  in 
such  county.  This  joker  has  been  incorpor- 
ated into  the  Nebraskan  amendment.  It  ap- 
pears in  the  Missouri  amendment  so  modified 
as  to  require  the  percentages  to  be  secured  in 
'each  of  two-thirds  of  the  congressional  dis- 
tricts of  the  state.'  The  signature  of  any 
voter  in  the  state  should  count,  regardless  of 
residence. 

" JOKER  No.  4. — To  so  frame  the  'emergency 
clause*  that  the  legislature  may  annul  the  Ref- 
erendum whenever  it  chooses. 

"The  usual  language    employed    is,    'The 


104  PROGRESS     AND     PLENTY 

Referendum  may  be  ordered,  except  as  to  laws 
necessary  for  the  immediate  preservation  of 
the  public  peace,  health  or  safety  *  *  *.'  The 
courts  have  held  that  the  legislature  is  the 
judge  as  to  what  constitutes  an  emergency, 
and  so  it  becomes  a  simple  matter  for  a  ma- 
jority, or  even  a  two-thirds  majority,  to  'ex- 
cept' any  law  from  the  possibility  of  a  vote  of 
the  people.  At  least  a  two-thirds  majority  of 
all  members  of  each  house  should  be  required 
to  declare  an  emergency,  and  such  vote  should 
be  on  a  separate  section  setting  forth  the  rea- 
sons for  the  emergency. 

" JOKER  No.  5. — To  put  an  arbitrary  limit 
upon  the  number  of  measures  which  may  be 
submitted  to  the  people  at  any  one  election. 

"This  is  an  old  scheme  which  has  worked 
great  hardship  to  the  people  of  several  states 
where  a  limit  has  been  set  to  the  number  of 
proposed  amendments  to  the  constitution  the 
legislature  could  submit  at  any  one  time.  In 
Kansas,  Arkansas  and  Montana,  only  three 
amendments  can  be  submitted  at  a  legislative 
session.  In  Illinois  only  one  article  of  the 
constitution  can  be  amended  at  an  election, 
etc.  When  grave  emergencies  arose  and  the 
people  demanded  important  changes  opposed 
by  the  interests,  the  legislature  has  quickly 
filled  the  ballot  with  trivial  proposals,  and 
made  it  impossible  for  the  important  measures 
to  be  voted  upon.  This  same  scheme  can  be 


PROGRESS     AND     PLENTY  105 

worked  when  the  Initiative  is  in  operation. 
It  is  a  great  and  growing  danger.  The  excuse 
will  be  made  that  the  ballot  must  not  be  'over- 
loaded.' But  when  a  large  number  of  ques- 
tions appear  upon  the  ballot  of  any  state,  it  is 
an  evidence  that  the  legislature  is  not  doing 
its  duty.  The  real  thing  that  troubles  the  poli- 
ticians and  their  masters  is  the  presence  on 
the  ballot  of  important  measures  which  they 
do  not  want  enacted  by  the  people.  Place  no 
limits  on  the  voters.  This  is  their  government 
and  they  can  take  care  of  themselves. 

"  JOKER  Xo.  6. — Failing  to  provide  an  ade- 
quate and  efficient  method  of  informing  the 
voters  concerning  the  measures  submitted  to 
them . 

"The  only  safety  for  the  political  machine  is 
to  keep  the  people  in  ignorance.  Hence,  every 
effort  by  stump  speakers  and  venal  news- 
papers to  distort  and  misrepresent  vital  pro- 
pbsals  made  through  the  Initiative  or  sent 
back  to  the  voters  by  the  Referendum.  News- 
paper advertising  is  of  little  value,  is  very  ex- 
pensive, and  is  open  to  political  graft.  The 
Oregon  Publicity  Pamphlet  is  the  thing." 

The  politicians  have  discovered  that  they 
cannot  defeat  bills  for  the  Initiative  and 
Referendum  directly,  so  they  are  pretending 
to  favor  direct  legislation,  and  at  the  same 
time  they  are  working  all  manner  of  under- 
hand methods  to  defeat  the  will  of  the  people. 


106  PROGRESS     AND     PLENTY 

In  several  of  the  states  the  bills  passed  are 
worthless.  Men  who  have  been  working  for 
direct  legislation  for  years  are  often  forced 
to  oppose  the  bills  presented.  It  costs  a  good 
deal  to  get  up  a  petition  of  5%  of  the  voters 
even  when  a  large  majority  are  in  favor  of 
the  measure;  but  when  the  law  requires  a 
petition  of  25%  of  the  voters  to  have  the  law 
referred  to  a  vote  of  the  people,  it  is  better 
not  to  have  the  bill  passed,  as  it  could  seldom 
be  used  even  when  urgently  needed.  I  can- 
not do  better  than  to  quote  part  of  an  article 
from  Equity: 

"In  addition  to  the  work  of  informing  our 
readers  upon  the  progress  of  Direct  Legisla- 
tion and  warning  the  workers  concerning  the 
dangers  from  abortive  Initiative  and  Refer- 
endum provisions,  we  have  been  arousing  the 
friends  of  the  movement  in  the  states  of 
Idaho,  Florida  and  Wyoming  to  the  necessity 
of  defeating  at  the  polls  the  fraudulent 
amendments  which  are  pending  adoption  and 
will  be  voted  upon  in  those  states  November  5. 

"As  a  result  of  our  efforts  the  Democratic 
County  Central  Committee  at  Boise,  Idaho, 
adopted  a  strong  resolution  against  the  pro- 
posed Idaho  amendment,  which  has  been  sent 
to  all  Democratic  central  committees  through- 
out that  state.  The  resolution  condemns  the 
requirement  that  a  majority  of  'all  votes 
cast'  is  necessary  to  enact  a  law  under  the 


PROGRESS     AND     PLENTY  107 

Initiative,  and  that  all  other  details  are  left 
for  legislative  action.  A  movement  is  on  foot, 
headed  by  Hon.  Victor  O.  Johnson,  of  Sho- 
shone,  to  establish  at  once  a  Direct  Legislation 
League  to  fight  the  proposal  at  the  polls  and 
pledge  candidates  for  the  legislature  to  submit 
a  workable,  honest  provision  at  the  next 
session. 

"In  Florida,  articles  from  the  editors  of 
Equity,  stating  reasons  for  the  rejection  of 
the  Florida  proposition,  have  appeared  in 
the  American  Eagle,  published  by  A.  H. 
Andrews,  at  Estero,  Fla.,  and  the  work  is 
being  prosecuted  of  arousing  the  live  wires  to 
the  danger  of  blocking  I.  and  R.  progress  in 
that  state  for  years  by  the  adoption  of  the 
proposed  amendment,  which  requires  25% 
petitions. 

"In  Wyoming,  which  has  the  worst  pend- 
ing amendment  of  all,  it  has  been  difficult  to 
get  action,  but  the  State  Federation  of  Labor 
is  responding  and  we  hope  for  results  from 
that  source.  This  proposed  amendment  re- 
quires 25%  petition  and  also  has  the  majority 
'of  all  votes  cast'  joker.  An  article  covering 
the  common  'jokers'  which  destroy  the  power 
of  any  amendment  appears  in  the  September 
issue  of  The  Federationist,  the  official  organ 
of  the  American  Federation  of  Labor. 

"The  work  of  Equity  is  against  bad  amend- 
ments, as  well  as  for  good  amendments. 


108  PROGRESS     AND     PLENTY 

"Several  magazines  of  nation-wide  circula- 
tion, like  Collier's,  The  Public,  etc.,  have  given 
notice  to  the  valuable  summary  of  the  'Pres- 
ent Status  of  the  Initiative  and  Referendum/ 
which  appeared  in  the  July  issue  of  Equity, 
and  repeated  in  this  issue,  and  other  editors 
have  used  the  material  furnished  by  this  mag- 
azine in  writing  valuable  articles  upori  the 
subject. 

"In  addition,  work  has  been  begun  in 
Pennsylvania  and  a  large  amount  of  educa- 
tional literature  is  going  out  of  the  office  to 
the  right  sources.  The  Editor  believes  that 
the  time  has  come  when  there  is  a  good  hope 
for  the  submission  of  an  amendment  by  the 
legislature  and  its  adoption  by  the  people  of 
the  Keystone  state. 

"We  invite  your  help  in  extending  the  cir- 
culation and  influence  of  this  magazine.  It 
is  a  patriotic  undertaking  published  at  a  con- 
stant loss,  and  supplies  a  need  which  no  other 
publication  does.  You  can  make  no  greater 
mistake  than  to  suppose  that  the  Initiative 
and  Referendum  is  safe,  now  that  it  is  en- 
dorsed by  so  many  political  parties  and  plat- 
forms. The  truth  is  that  we  were  never  in  so 
great  danger  as  now.  The  'progressive'  poli- 
ticians of  all  stripes  and  parties  are  espousing 
this  cause  for  the  purpose  of  getting  elected 
to  office.  They  have  favored  and  will  favor 
*  jokers'  which  render  the  I.  and  R.  of  na 


PROGRESS     AND     PLENTY  109 

value.  Now  is  the  time  to  stand  for  the  real 
thing  and  not  sit  supinely  by  and  wake  up 
later  to  the  fact  that  a  worthless  I.  and  R. 
amendment  'safeguarded'  by  politicians  is 
worse  than  none  at  all." 


CHAPTER   XL 

SOCIALIST  POLITICAL  ECONOMY. 

When  we  get  the  Initiative,  Referendum, 
and  Recall  adopted  in  every  State  in  good 
practical  working  laws,  the  self-seeking, 
grafting,  politicians  will  lose  their  power  to 
prevent  good  laws  from  being  passed,  or  bad 
laws  from  being  repealed.  Then  we  will  not 
need  political  parties,  and  if  they  still  exist  it 
will  be  principally  for  educational  work.  If 
for  instance  the  Socialist  Party  elected  their 
candidates  to  office  they  could  not  put  a  single 
law  on  the  statute  books  that  a  majority  of 
the  people  opposed;  and  without  gaining  a 
single  office  they  could  have  any  law  passed 
that  a  majority  of  the  people  did  want.  A 
great  deal  of  nonsense  has  been  written  in  the 
name  of  Socialism  in  the  past,  and  we  may 
find  that  some  of  their  political  economy  is 
not  scientific  yet;  but  for  all  that  we  may 
learn  as  much  from  the  Socialists  as  from  any 
other  school  of  political  economy.  One  of  the 
good  reforms  they  advocate  is  Direct  Legisla- 
tion, and  it  is  evident  from  the  following  quo- 
tation that  they  understand  the  cause  of  pov- 


PROGRESS     AND     PLENTY  111 

erty,  and  the  doctrine  of  the  survival  of  the 
fittest.  The  following  is  from  "The  Prin- 
ciples of  Scientific  Socialism"  by  Rev.  C.  H. 
Vail:  "Is  there  any  one  who  does  not  see  that 
the  poverty  of  the  many  is  caused  by  the  rob- 
bery and  waste  of  the  few?  So  long  as  we 
have  a  privileged  class  who  shirk  their  duty 
and  compel  others  to  do  their  work,  so  long 
will  there  be  degradation  and  poverty.  But 
why  do  laborers  submit  to  this  condition? 
Simply  because  the  privileged  class  has  gained 
a  monopoly  of  the  means  of  production  which 
is  necessary  to  labor.  The  laborer  being  un- 
able to  employ  himself  is  obliged  to  submit  to 
the  conditions  imposed  upon  him.  The  first 
step  in  the  abolition  of  poverty  is  the  abolition 
of  the  parasite  class.  Poverty  will  be  impos- 
sible when  every  man  is  obliged  to  live  by  his 
own  labor,  instead  of  the  labor  of  others.  At 
present,  between  the  waste  of  labor-power  in 
mere  idleness  and  its  waste  in  unproductive 
work,  but  a  small  part  of  the  people  are  pro- 
ductively employed.  Were  all  usefully  em- 
ployed and  the  waste  of  our  competitive  sys- 
tem eliminated,  but  a  few  hours'  work  would 
be  required  to  produce  an  abundance  for  all. 
Abolish  class  robbery  and  the  problem  is 
solved.  'Whereas  it  has  been  known  and 
declared,'  says  Ruskin,  'that  the  poor  have  no 
right  to  the  property  of  the  rich,  I  wish  it  also 
to  be  known  and  declared  that  the  rich  have 


112  PROGRESS     AND     PLENTY 

no  right  to  the  property  of  the  poor.'  Give 
to  every  man  the  full  product  of  his  lahor  and 
he  will  be  able  to  live  in  decency  and  plenty. 

"But  it  is  said  that  the  poor  are  poor  be- 
cause they  are  not  fitted  to  be  anything  else; 
that  the  fittest  survive  and  that  this  is  the  in- 
exorable law  of  nature.  Let  us  look  at  this  law 
of  the  survival  of  the  fittest.  What  does  it 
mean?  It  simply  means  that  a  plant,  animal, 
or  man  that  is  best  fitted  to  survive  under 
certain  conditions  will  survive.  It  has  noth- 
ing whatever  to  do  with  the  quality  of  the 
conditions.  According  to  this  law  the  man 
who  succeeds  in  a  certain  society  is  best  fitted 
to  that  kind  of  environment.  Thus,  under 
certain  conditions,  one  type  of  man  will  be 
best  fitted  to  survive,  while  under  different 
conditions,  a  different  type  will  succeed.  In 
the  early  days,  when  physical  strength  was 
king,  the  man  best  fitted  to  survive  was  the 
one  with  physical  strength  and  endurance. 
Today  when  commercialism  is  king,  the  man 
who  succeeds  does  not  require  strength  of  arm 
so  much  as  cunning  and  clearness  of  head.  A 
John  L.  Sullivan  is  the  type  of  man  best  fitted 
to  survive  in  ancient  society;  a  Rockefeller  in 
modern  society.  But  neither  one  of  these 
types  touches  the  moral  qualifications.  Evi- 
dently then,  the  fittest  has  nothing  to  do  with 
morality.  The  poor,  then,  are  poor  simply 
because  they  are  not  fitted  or  have  not  the 


PROGRESS     AND     PLENTY  113 

opportunity  to  succeed  in  the  acquisition  of 
wealth  under  present  conditions.  It  does  not 
follow  that  they  are  not  worthy  of  a  decent 
livelihood  or  that  they  might  not  succeed  un- 
der different  conditions.  The  survival  of  the 
fittest,  under  present  conditions,  does  not 
secure  the  survival  of  the  noblest  and  best, 
but  rather  the  reverse.  Commercialism,  like 
physical  combat,  is  a  war,  in  which  cunning 
in  one  instance  and  brute  force  in  the  other 
succeeds.  In  commerce  Jesus  Christ  would 
have  been  no  match  for  Rockefeller;  in 
physical  combat  Buddha  would  have  stood  no 
show  with  Sullivan.  Now  which  is  the  best 
condition  of  society,  that  which  gives  the  low- 
est type  of  humanity  the  pre-eminence,  or  the 
highest  type?  If  the  highest  type  should  suc- 
ceed, ought  not  society  to  be  so  reconstructed 
that  the  noblest  and  best  qualities  shall  have 
full  play?  We  have  no  objection  to  the  sur- 
vival of  the  fittest,  only  we  desire  that  society 
shall  be  so  organized  that  the  real  fittest  shall 
survive.  We  desire  such  a  condition  that  the 
law  shall  work  for  good  instead  of  evil. 

"The  law  as  we  have  noted,  insures  the  sur- 
vival of  those  best  adapted  to  the  conditions 
under  which  it  works.  If  the  conditions  are 
such  that  the  unscrupulous  and  unjust  are 
given  an  advantage,  then  these  are  the  ones 
best  adapted  to  succeed.  We  object  to  the 
present  industrial  and  social  conditions  for 


114  PROGRESS     AND     PLENTY 

the  reason  that  it  makes  the  basest  best  fitted 
to  survive.  We  wish  to  establish  an  economic 
and  social  environment  under  which  all  will 
be  'fit'  and  all  will  'survive.'  We  would  so 
organize  society  that  none  would  be  pushed 
to  the  wall,  and  that  while  each  would  suc- 
ceed in  accordance  with  his  fitness,  still  the 
success  of  one  would  not  mean  the  failure  of 
another.  Socialism  would  reorganize  society 
on  such  a  basis  as  would  guarantee  the  sur- 
vival of  all  its  members.  It  would  abolish 
forever  this  hell  of  poverty  that  results  from 
special  privilege." 

I  think  very  few  can  object  to  anything  in 
the  above  quotation,  and  if  Socialists  could 
offer  a  plan  for  correcting  the  evils  of  our 
social  system  that  would  be  practical  and  that 
would  not  interfere  with  individual  rights, 
Socialism  would  advance  much  faster  than  it 
is  doing.  But  so  far  different  writers  on 
Socialism,  although  agreeing  on  general  prin- 
ciples, have  not  been  able  to  present  a  prac- 
tical plan  for  carrying  them  out.  There  is 
one  general  plan  advocated  by  F.  M.  Sprague 
and  others  that  certainly  is  practical  as  far  as 
it  goes,  and  if  Socialism  is  ever  brought  about, 
it  will  probably  be  done  in  that  way.  They 
see  that  Socialism  requires  too  great  a  change 
from  existing  institutions  to  be  accomplished 
at  once,  or  even  in  a  short  time.  Therefore 
they  would  bring  it  about  by  degrees,  meeting 


PROGRESS     AND     PLENTY  115 

the  problems  one  at  a  time,  and  crossing  the 
bridges,  so  to  speak,  as  we  come  to  them. 
The  only  objection  I  can  see  to  such  a  plan  is 
that  it  may  never  lead  to  the  kind  of  Socialism 
that  some  Socialists  dream  of;  but  we  can 
apply  democratic  principles  to  industry,  bring 
about  a  state  of  social  justice,  and  fraternal 
equality,  better,  and  more  quickly  in  that  way 
than  in  any  other.  And,  as  a  Socialist  lec- 
turer said:  "In  that  way  we  will  get  rid  of  the 
rubbish." 

Mr.  Sprague  says:  "We  examine  the  prin- 
ciples on  which  the  new  ship  is  constructed, 
and  finding  them  to  be  civil  liberty,  fraternal 
equality,  and  social  justice,  we  are  logically 
bound  to  accept  them  without  regard  to  the 
particular  manner  in  which  the  ship  may  be 
rigged.  In  other  words,  Socialists  may  logi- 
cally insist  on  the  adoption  of  these  principles, 
leaving  their  application  to  future  contin- 
gencies. The  eternal,  political,  and  moral 
verities  on  which  our  republic  is  founded  were 
rightly  regarded  by  our  fathers  as  sufficient 
ground  for  the  Revolution  and  guarantee  for 
democracy.  Questions  of  administration,  the 
relations  and  reciprocal  duties  of  citizens, 
States,  and  nation,  the  numerous  details  of 
the  constitution,  the  particulars  of  legislation, 
repeals,  amendments  and  experiments — in 
short,  the  entire  modus  operandi  involved  and 
required  in  the  successful  working  of  a  re- 


116  PROGRESS     AND     PLENTY 

publican  form  of  government,  were  outlined 
but  dimly,  if  at  all,  when  the  logic,  none  the 
less  sound  and  conclusive,  of  Concord,  Lex- 
ington, and  Bunker  Hill  was  applied  in  the 
name  of  Justice,  Liberty  and  Equality. 
Those  who  would  discuss  details,  or  the  work- 
ings of  a  proposed  theory  in  order  to  deter- 
mine the  principle  of  action,  assume  that  the 
principle  is  one  solely  of  expediency.  A 
moral  question  admits  of  no  such  determina- 
tion. Socialism  is  essentially  a  moral  ques- 
tion, and  herein  lies  the  secret  of  its  strength, 
the  hope  of  its  friends,  and  the  terror  of  its 

enemies Distrust  of  these  principles  is 

pessimism.  Their  judicious  application  de- 
pends upon  the  exigencies  of  time  and  circum- 
stances, and  affords  abundant  room  for  the 
theories  of  philosophers,  philanthropists,  and 
statesmen.  He  who  insists  upon  any  arbi- 
trary or  invariable  application  of  them, 
whether  a  Socialist  or  individualist,  is  a 
fanatic  or  a  crank.  The  details  of  the  Social- 
istic state,  as  outlined  by  certain  Socialists, 
are  not  essential  to  its  existence  and  successful 
working.  On  the  contrary,  they  are  wholly 
gratuitous.  When  therefore,  they  are  refuted 
by  an  opponent,  let  him  not  imagine  that 
Socialism  is  thereby  overthrown.  Other  de- 
tails or  application  of  the  principles  of  Social- 
ism are  not  only  possible  but  probable." 
There  are  thousands  who  believe  in  the 


PROGRESS     AND     PLENTY  117 

above  principles,  who  cannot  accept  the  de- 
tailed plan  of  any  Socialist  party  and  who 
therefore  cannot  join  a  Socialist  party,  who 
are  nevertheless  ready  to  vote  for  any  practi- 
cal measures  that  will  carry  out  these  princi- 
ples. It  is  to  be  hoped  that  when  we  get 
direct  legislation,  the  members  of  the  Socialist 
party  will  vote  for  measures  that  harmonize 
with  these  principles,  even  when  advocated  by 
other  parties.  If  they  do  we  will  carry  these 
principles  by  larger  majorities,  and  have  them 
adopted  more  quickly  than  if  we  have  to  wait 
for  either  the  Socialist  or  some  other  reform 
partjr  to  come  into  power. 

Socialists  differ  on  a  very  important  point— 
the  law  of  wages.    Vail  in  his  "Principles  of 
Scientific  Socialism,"  puts  the  cart  before  the 
horse  and  says : 

"The  cost  of  the  laborer  is  the  cost  of  his 
living,  and  other  things  being  the  same,  his 
living  is  determined  by  the  number  of  his 
habitual  needs." 

He  quotes  Ricardo  and  Marx  to  maintain 
his  theory,  and  disproves  it  by  admitting  that : 
"In  each  country  the  average  cost  of  living 
constitutes  a  social  standard,  or  socially  ac- 
cepted standard,  of  living,  and  this  at  any 
given  period,  regulates  the  rate  of  wages.  It 
is  the  social  standard  of  living  that  regulates 
the  general  rate  of  wages,  and  wages  regulate 
the  individual  standard  of  living.  When  the 


118  PROGRESS     AND     PLENTY 

standard  is  established,  the  price  of  labor 
power,  being  affected  by  demand  and  supply, 
will  vibrate  above  and  below  its  natural  value. 
If  the  supply  is  excessive,  the  price  of  labor 
power,  like  other  commodities,  falls,  and  if 
the  supply  continues  in  excess  of  the  demand 
a  new  social  standard  will  be  established 
around  which,  as  from  a  centre,  the  price  of 
labor  power  will  oscillate.  The  value  of  labor 
power  both  rises  and  falls  in  accordance  with 
this  law."  Does  not  that  prove  that  it  is  sup- 
ply and  demand  and  not  the  standard  of  liv- 
ing, which  is  the  law  of  wages?  Mr.  Sprague, 
in  "Socialism"  says:  "Adam  Smith  mentions 
five  causes  which  determine  wages,  but  not 
one  of  them  is  the  'standard  of  living.' ' 
Again  he  says:  "So  far  from  the  truth  is  it 
that  wages  depend  on  'the  standard  of  living' 
that  the  exact  opposite  is  truer;  namely,  that 
the  standard  of  living  depends  on  wages  and 
changes  with  every  variation  in  wages." 

Although  he  does  not  pretend  to  know  what 
the  law  of  wages  is,  he  really  states  it  in  the 
following:  "We  may  not  be  able  to  say  what 
determines  wages.  If  we  were  to  sell  labor, 
we  would  get  the  most  possible ;  if  we  were  to 
buy  it,  we  would  pay  the  least  possible,  for 
the  simple  reason  that  while  we  abhor  the  sys- 
tem that  makes  competition  necessary,  any 
other  course,  under  individualism  would  soon 
compel  us  to  take  up  our  march  'over  the  hill 


PROGRESS     AND     PLENTY  119 

to  the  poorhouse.' '  Socialists  use  the  word 
"value"  in  so  many  ways  that  they  can 
scarcely  be  said  to  attach  any  meaning  to  the 
word  at  all.  Whenever  more  than  one  mean- 
ing is  given  to  a  word  in  economic  discussion 
it  is  sure  to  lead  to  confusion.  Socialists  avoid 
this  to  some  extent  by  using  a  qualifying 
word,  but  in  nearly  every  case  the  qualifying 
word  can  be  used  to  express  the  meaning 
without  using  the  word  "value"  except  when 
they  are  speaking  of  "exchange  value"  and  in 
that  case,  if  they  only  used  the  word  "value" 
in  its  true  sense  the  word  exchange  would  not 
be  necessary.  While  this  is  true  of  other 
words  and  other  schools  of  Political  Economy, 
and  although  "value"  is  often  misused  by  all, 
still  there  is  no  stumbling  block  in  the  Socialist 
philosophy  that  compares  with  "value." 
"Useful"  expresses  the  same  meaning  as  "use 
value"  and  in  the  latter  expression  "value"  is 
of  no  "use."  A  Socialist,  after  hearing  a  lec- 
ture on  Political  Economy,  did  not  understand 
it  very  well,  because  the  lecturer  "never  told 
what  kind  of  values  he  was  talking  about." 

Sprague  says:  "Labor  is  the  source  of  all 
value,"  meaning  that  labor  is  the  source  of 
all  wealth.  Value  is  simply  a  relation  between 
two  or  more  things.  "It  is  neither  a  thing  nor 
an  attribute  of  things."  Nothing  has  value 
until  it  is  compared  with  something  else,  and 
then  its  value  depends  upon  the  relative  sup- 


120  PROGRESS     AND     PLENTY 

ply  of  and  demand  for  the  articles  compared. 

It  is  true  that  the  amount  of  labor  required 
to  produce  an  article  affects  its  value  because 
the  laborer  must  be  paid  for  making  it,  and  if 
the  demand  for  an  article  does  not  cause  its 
price  to  cover  the  cost  of  production — includ- 
ing the  cost  of  labor — fewer  of  such  articles 
will  be  made  until  the  reduced  supply  causes 
the  price  to  rise  enough  to  cover  the  cost  of 
production.  This  encourages  laborers  to  pro- 
duce the  things  that  people  want  the  most, 
because  by  so  doing  they  will  get  the  highest 
wages  or  profits;  and  it  discourages  them 
from  making  what  people  do  not  want,  be- 
cause it  does  not  pay. 

It  may  seem  to  some  that  there  is  no  mate- 
rial difference  between  my  theory  and  Mr. 
Sprague's.  He  claims  that  the  value  of  an 
article  depends  upon  the  time  required  by 
laborers  to  produce  it,  but  admits  that  supply 
and  demand  (or  competition)  may  cause  the 
price  either  to  rise  above  or  fall  below  the  cost 
of  production.  While  I  claim  that  the  value 
of  all  things  depends  upon  competition,  but 
admit  that  labor  will  not  be  directed  to  mak- 
ing goods  unless  there  is  sufficient  demand 
for  them  to  cause  their  price  to  at  least  equal 
the  cost  of  production.  But  in  problems  of 
this  kind  a  slight  mistake  in  the  premises  may 
lead  to  altogether  unwarranted  conclusions, 
and  I  think  it  the  different  meanings  we  attach 


PBOGRESS     AND     PLENTY  121 

to  the  word  "value"  and  our  different  ideas  of 
what  causes  value,  that  has  made  us  differ 
entirely  as  to  what  is  required  to  make  wages 
high.  Believing  that  the  price  of  labor  de- 
pends upon  supply  and  demand  I  naturally 
come  to  the  conclusion  that  if  we  regulate 
competition  so  that  there  will  always  be  a  de- 
mand for  all  the  labor  offered,  wages  will  then 
be  high.  Sprague,  believing  that  the  value  of 
goods  depends  upon  the  time  labor  requires 
to  produce  them,  comes  to  the  conclusion  that 
competition  must  be  abolished.  Mr.  Vail,  be- 
lieving that  wages  depend  upon  the  cost  of 
living,  would  abolish  the  wage  system. 

Del  Mar  speaks  of  the  execrable  jargon  of 
the  writers  of  the  capitalist  school  of  political 
economy,  and  I  am  sure  the  Socialist  jargon 
is  far  worse  and  some  new  terms  are  necessary 
to  avoid  the  use  of  some  words  in  more  than 
one  sense. 

Whether  the  co-operative  commonwealth  is 
necessary  to  the  reign  of  social  justice  or  not, 
is  a  question  that  may  be  left  open  until  we 
get  some  other  reforms  that  are  more  pressing 
and  easier  to  apply.  A  reformed  system  of 
currency  is  the  most  pressing  question  at  pres- 
ent, as  it  is  before  Congress  now.  The  plan 
I  advocate  is  in  harmony  with  the  Socialist 
platform  and  it  may  even  suit  the  bankers, 
except  that  they  will  be  sure  to  want  the  rate 
of  interest  charged  for  government  loans  fixed 


122  PROGRESS     AND     PLENTY 

at  a  high  rate  so  as  not  to  interfere  with  their 
profits. 

The  taxation  of  land  values  is  gaining  in 
popularity  with  the  Socialists  as  well  as  with 
other  reformers,  in  fact  the  forces  of  Democ- 
racy are  gradually  drawing  together.  Social- 
ists are  becoming  more  democratic  and  Demo- 
crats more  Socialistic,  and  if  the  tendency 
continues  they  must  finally  meet  and  unite. 
When  that  time  comes  the  reign  of  social  jus- 
tice will  be  very  near.  Direct  Legislation, 
land  and  money  reform,  are  the  three  most 
important  steps  towards  a  higher  civilization, 
and  when  we  get  them  the  less  important  re- 
forms will  soon  follow.  The  public  ownership 
of  capital  is  altogether  unnecessary.  Give  the 
government  control  of  the  currency  and  the 
people  loans  at  a  low  rate  of  interest,  and  the 
capitalists'  power  to  oppress  labor  is  gone.  A 
tax  on  land  values  will  free  labor  from  the 
oppression  of  the  landlord.  These  two  re- 
forms will  bring  us  very  close  to  the  Socialist 
ideal,  and  although  many  other  reforms  are 
desirable,  they  are  not  really  necessary. 


CHAPTER  XII. 

REFORMERS  MUST  UNITE  TO  WIN. 

If  land  reformers,  money  reformers,  and 
Socialists,  could  all  unite,  they  could  soon 
overcome  all  opposition,  and  we  would  soon 
have  an  improved  industrial  system.  The 
principal  obstacle  to  union  is  that  their  pro- 
posed remedies  do  not  all  harmonize  with  nat- 
ural law.  When  reformers  all  realize  that: 
"The  laws  of  the  universe  are  harmonious," 
that  economic  laws  are  no  exception,  and 
when  a  plan  for  an  improved  industrial  sys- 
tem is  presented,  with  all  the  proposed 
changes  harmonizing  not  only  with  natural 
law  but  with  one  another,  there  is  scarcely  a 
doubt  but  what  such  a  plan  will  bring  reform- 
ers together.  The  followers  of  Henry  George 
must  be  shown  his  mistake;  they  must  learn 
that  man's  right  to  the  use  of  the  earth,  and 
his  right  to  exchange  his  wealth  with  whom- 
soever he  will,  are  not  the  only  natural  laws 
that  are  infringed  by  our  industrial  system. 
They  must  learn  that  in  order  to  employ  them- 
selves effectively  laborers  require  capital ;  that 
the  easier  it  is  for  them  to  obtain  capital,  the 


124  PROGRESS     AND     PLENTY 

greater  will  be  the  number  of  laborers  who  can 
employ  themselves  profitably,  consequently, 
less  competition  for  work  and  higher  wages. 
They  have  also  to  learn  that  government  is 
simply  organized  society,  and  that  it  should 
work  for  the  common  good.  If  the  majority 
decides  that  the  government  should  enter  the 
industrial  field,  there  is  no  good  reason  why  it 
should  not.  It  can  do  so  without  interfering 
with  the  rights  of  capitalists,  and  by  so  doing 
it  can  free  the  laborers  from  dependence  upon 
capitalists.  We  can  adjust  our  social  system 
to  the  law  of  competition  in  such  a  way  that 
wealth  will  be  justly  distributed,  or  we  can 
adjust  it  so  that  competition  will  give  most 
of  the  wealth  produced  to  a  few. 

Our  legislators  have  understood  natural  law 
pretty  well  but  have  worked  for  the  latter 
result  and  have  been  quite  successful.  I  like 
the  way  Mr.  Blissard  states  the  case  in  his 
"Ethics  of  Usury  and  Interest."  He  says: 
"A  fixed  rate  of  lawful  interest  was  an  empiric 
remedy  and  failed.  In  unreformed  parlia- 
ments no  scruples  were  ever  shown  as  to  inter- 
fering with  economic  laws  so  as  to  benefit  the 
legislators.  Wages  were  fixed  by  act  of  Par- 
liament. The  importation  of  Irish  cattle  was 
prohibited  for  the  benefit  of  English  land- 
lords, just  as  the  importation  of  foreign  corn 
was  handicapped  by  a  duty.  The  doctrine  of 
Laissez-faire  inaugurated  later,  was  not  so 


PROGRESS     AND     PLENTY  125 

much  a  policy  as  an  interregnum  between  two 
policies.  It  succeeded  a  system  of  violent  in- 
terference of  the  civil  law  against  economic 
forces.  It  should  precede  a  system  of  direct- 
ing these  forces  into  channels  of  social  useful- 
ness." That  is  just  it.  We  cannot  prevent 
these  forces  from  working,  but  we  can,  if  we 
understand  them,  adapt  our  institutions  to 
them  in  such  a  way  that  they  will  benefit  the 
whole  people.  Now  that  is  just  what  reform- 
ers are  trying  to  do.  The  Single  Tax  move- 
ment is  an  attempt  to  direct  natural  forces  in 
such  a  way  as  to  benefit  the  whole  race,  by 
restoring  the  right  to  the  use  of  the  earth  to 
all.  The  Socialist  propaganda  is  for  the  same 
purpose.  They  not  only  intend  restoring  the 
earth  to  all  men,  but  they  intend  to  enable 
every  man  to  apply  his  labor  effectively,  by 
supplying  him  with  the  necessary  capital.  If 
they  understood  natural  law  better  they  would 
try  to  harmonize  their  proposed  reforms  to 
these  laws.  They  see  the  bad  effects  of  rent, 
interest,  and  competition,  and  propose  to  abol- 
ish them.  Our  system  of  commerce  and  in- 
dustry has  been  adjusted  to  these  laws  in  such 
a  way  as  to  enslave  the  masses  and  keep  them 
dependent  upon  the  rulers,  or  those  who  con- 
trol the  land  and  the  money.  Social  justice 
can  be  established  without  abolishing  any  of 
these.  Rent  and  interest  can  both  be  taken 
for  the  common  good  and  competition  can  be 


126  PROGRESS     AND     PLENTY 

prevented  from  forcing  wages  down  or  from 
having  any  other  bad  effect.  Our  industrial 
system  based  on  monopolized  land  and  cap- 
ital, forces  people  to  compete  and  to  be  far 
more  selfish  than  they  would  be  under  condi- 
tions that  would  enable  them  to  get  land  and 
capital  on  easier  terms.  Under  better  condi- 
tions competition  certainly  will  not  be  so  keen, 
and  as  people  become  less  selfish,  may  grad- 
ually die  out,  at  least  the  bad  phases  of  it  will. 
It  did  not  require  any  man-made  law  to  start 
the  competitive  system,  and  it  does  not  require 
any  special  law  to  abolish  it.  We  can  guide 
competition  into  channels  of  social  usefulness. 
Systems  may  be  adopted  that  will  prevent 
competition  from  doing  harm.  For  instance: 
taxing  land  values  will  prevent  competition 
for  land  from  forcing  rent  as  high  as  it  does 
under  the  present  system;  and  the  reform 
which  I  propose  for  the  currency  would  pre- 
vent competition  for  money  from  forcing  in- 
terest above  the  government  rate.  Laws  have 
been  passed  to  prevent  usury  by  forbidding 
people  to  charge  more  than  a  certain  rate  of 
interest;  such  laws  generally  do  more  harm 
than  good,  as  it  is  often  better  to  pay  a  high 
rate  of  interest  than  not  to  secure  a  loan. 
The  government,  by  forbidding  people  to 
charge  more  than  a  certain  rate  of  interest, 
causes  less  money  to  be  loaned,  and  borrowers 
are  often  forced  either  to  evade  the  law  or  to 


PROGRESS     AND     PLENTY  127 

get  along  without  the  loan.  Now  if  instead  of 
forbidding  people  to  ask  more  than  a  certain 
rate,  the  government  had  offered  to  furnish 
loans  at  a  certain  rate  whenever  the  borrowers 
could  not  obtain  money  at  that  rate,  it  would 
prevent  high  interest  without  causing  any 
hardship  to  borrowers.  The  same  principle 
can  be  applied  to  wages. 

The  government  has  no  right  to  compel 
employers  of  labor  to  pay  more  than  the  com- 
petitive price,  but  the  people  have  a  perfect 
right  to  hire  all  the  unemployed  at  as  high 
wages  as  they  can  afford  to  pay.  So  if  in- 
stead of  asking  for  a  law  compelling  all  who 
hired  laborers,  to  pay  at  least  the  wages  fixed 
by  law,  the  people  should  require  the  govern- 
ment to  hire  all  the  unemployed  at  a  minimum 
wage,  then  employers  could  not  hire  any 
laborers  for  less  than  the  minimum  wage  and 
competition  could  only  raise  wages  above  the 
government  rate,  and  there  would  be  no  un- 
employed. On  the  other  hand  to  compel  em- 
ployers to  pay  more  than  the  competitive  wage 
would  cause  more  to  be  unemployed  than  there 
would  be  without  a  fixed  minimum  wage. 

If  that  plan  was  carried  out  the  government 
would  get  all  the  inefficient  workers  in  the 
country  and  suitable  employment  would  have 
to  be  furnished  for  them.  We  have  reached 
a  state  of  civilization  where  there  should  be 
no  unemployed.  It  is  a  disgrace  to  our  coun- 


128  PROGRESS     AND     PLENTY 

try  that  there  is  a  person  in  the  land  able  and 
willing  to  work,  who  cannot  find  an  opportu- 
nity at  fair  wages.  We  should  not  only  find 
employment  at  high  wages  for  all  who  can 
work,  but  we  should  also  feed,  clothe  and 
shelter  all  who  can  not.  If  we  were  to  pay  a 
minimum  wage  to  all  who  applied  for  it, 
whether  they  could  work  at  all  or  not,  the 
minimum  wage  might  take  the  place  of  the 
proposed  old  age  pensions,  and  in  fact  almost 
all  other  kinds  of  charity,  besides  finding  em- 
ployment for  all  able  workers  who  could  not 
find  employment  at  higher  wages, 

I  do  not  mean  that  the  government  should 
pay  able-bodied  men  a  minimum  wage  unless 
they  worked,  but  that  those  who  applied  for 
the  minimum  wage  should  get  it  although  un- 
able to  work.  Speaking  of  the  unemployed, 
is  there  a  more  idiotic  plan  possible  for  keep- 
ing people  unemployed  than  the  army?  Until 
the  army  is  disbanded  altogether  the  soldiers 
should  be  put  to  work  at  some  useful  occupa- 
tions, and  their  wages  raised.  They  might  be 
drilled  one  day  in  the  week  and  earn  enough 
to  be  self-supporting  at  much  higher  wages 
than  they  are  getting.  If  we  raised  all  public 
revenues  by  taxing  land  values  and  supplying 
the  people  with  money  at  a  low  rate  of  inter- 
est, a  minimum  wage  would  probably  not  be 
necessary  for  able-bodied  men,  as  there  would 
probably  be  work  for  all  at  high  wages,  and 


PROGRESS     AND     PLENTY  129 

when  child  labor  is  prohibited  there  will  be 
plenty  of  easy  work  for  those  unable  to  do 
hard  work. 

One  object  I  had  in  mind  when  starting  to 
write  this  book  was  to  present  a  plan  upon 
which  all  reformers  could  unite.  I  have  not 
appealed  to  either  passion  or  prejudice.  I 
have  tried  to  be  fair  to  all  parties,  to  admit  the 
truth,  no  matter  who  advocated  it,  and  also  to 
expose  economic  error  wherever  I  could  detect 
it.  Whether  I  have  presented  the  truth  in 
acceptable  form  or  not  remains  to  be  seen.  I 
have  appealed  only  to  reason,  and  leave  it  to 
the  readers  to  judge  if  I  have  made  a  reason- 
able appeal. 


CHAPTER  XIII. 

CONCLUSION. 

I  have  attempted  to  correct  some  economic 
fallacies,  and  to  substitute  true  for  false  prin- 
ciples. There  is  no  principle  advocated  in  this 
book  that  has  not  been  accepted  by  a  large 
number  of  people,  still  there  is  no  book  advo- 
cating the  same  set  of  principles.  I  have 
found  some  truth  that  has  not  been  generally 
accepted  in  all  schools  of  political  economy, 
and  I  have  found  error  in  the  teachings  of  all 
the  works  I  have  examined.  To  me,  my  phil- 
osophy seems  perfectly  harmonious ;  but  I  do 
not  forget  that  Mr.  George's  philosophy 
seemed  harmonious  to  him,  and  still  seems  so 
to  some  of  his  followers.  It  must  be  so  with 
all  writers.  If  we  could  see  our  own  mistakes 
we  would  not  make  them.  Of  course  a  person 
may  advance  arguments  for  a  theory  that  he 
cannot  fully  prove,  but  I  have  not  attempted 
to  disprove  anything  without  having  what  I 
considered  conclusive  evidence  that  it  was 
false;  nor  have  I  attempted  to  prove  anything 
unless  I  believed  the  evidence  justified  me  in 
accepting  it.  If  I  have  expressed  no  doubts 


PROGRESS     AND     PLENTY  131 

on  any  of  the  points  I  have  tried  to  make,  it  is 
because  I  have  seen  no  reason  to  doubt  the 
correctness  of  my  position. 

Although  no  Political  Economist  states  that 
competition,  or  supply  and  demand,  is  the  law 
of  distribution,  yet  they  all  admit  it  either 
directly  or  indirectly.  As  to  Mr.  George's 
theory  that  high  rent  lowers  wages  while  high 
interest  raises  them,  the  facts  are  so  plain  and 
so  generally  accepted  that  I  must  apologize 
for  taking  up  so  much  space  refuting  it.  My 
excuse  is  that  a  great  many  of  Mr.  George's 
followers  still  believe  in  that  doctrine,  and  it 
not  only  prevents  them  from  taking  up  other 
needed  reforms,  but  weakens  the  Single  Tax 
cause.  In  other  respects  the  Single  Tax 
theories  are  ahead  of  any  other  economic  theo- 
ries, and  its  advocates  are  among  the  ablest 
and  most  earnest  reformers.  It  is  of  vital  im- 
portance that  all  reformers  should  see  that 
high  interest  must  have  the  same  effect  upon 
wages  that  high  rent  has — that  is  to  lower 
them.  Any  one  who  accepts  Mr.  George's 
statement  that:  "The  laws  of  distribution  are 
laws  of  proportion,"  must  surely  recognize  the 
fact,  that  if  wages  are  lessened  by  the  landlord 
getting  a  large  share  of  the  product  they  must 
also  be  lessened  by  the  capitalist  getting  a 
large  share.  A  person  who  does  not  see  that 
cannot  come  to  right  conclusions  as  to  the  re- 
lation of  capitalists  and  laborers.  He  must 


132  PROGRESS     AND     PLENTY 

attach  too  much  importance  to  the   effect   of 
rent  upon  wages,  and  he  must  fail  to  see  the 
pernicious  effect  of    high    interest    or    large 
profits.    No  one  who  does  not  understand  the 
true  law  of  Distribution  can  be  a  consistent 
worker   for   reform.    The   most   conspicuous 
example  which  I  can  think  of  is  the  late  Tom 
L.  Johnson.    He  was  a  sincere,  earnest  worker 
for  a  just  division  of  wealth,  but  his  accept- 
ance of  Mr.  George's  theory  that  high  interest 
accompanied  high  wages  caused  him  to  advo- 
cate a  system  of  currency  actually  worse  than 
the  one  we  have,  and  that  is  saying  a  good 
deal.     While  in  Congress  he  presented  a  bill 
to  have  the  government  issue  3%  bonds.    The 
owners  of  the  bonds  were  to  have  the  privilege 
of  exchanging  their  bonds  for  money,  or  their 
money  for  bonds,  whenever  they  chose.     Such 
a  plan  would  prevent   inflation,   and  would 
contract   the   currency   automatically,   as   the 
bondholders  would  be  sure  to  turn  their  money 
into  the  treasury  whenever  they  could  not  get 
more  than  three  per  cent  for  it.    When  money 
was  scarce  the  bondholders  could  present  their 
bonds,  and  withdraw  their   money   from   the 
treasury,  and  put  it  in    circulation.     So    the 
plan  would  be  automatic  as  long  as  the  bond- 
holders allowed  the  law  of  supply  and  demand 
to  take  its  course.     The  objections    I    see   to 
Johnson's    plan    are    that    the    bondholders 
would  have  it  in  their  power  to   control   the 


PROGRESS     AND     PLENTY  133 

currency  as  they  wished.  As  the  law  stands, 
financiers  sometimes  keep  money  hoarded  in 
order  to  keep  interest  high.  In  New  Zealand, 
before  the  government  passed  the  "Loans  To 
Settlers"  act,  the  bankers  used  to  send  money 
to  Australia  and  invest  it  at  a  lower  rate  of 
interest  than  they  could  get  in  New  Zealand 
in  order  to  keep  interest  high  at  home.  A 
combination  of  financiers  can  often  afford  to 
keep  part  of  their  money  idle  without  loss  as 
they  can  get  higher  interest  on  what  is  in- 
vested by  so  doing;  and  it  often  pays  them  to 
do  so  in  order  to  affect  prices.  How  much 
more  temptation  they  would  have  to  keep  their 
money  idle  when  it  was  needed  in  circulation 
if  the  people  were  taxed  to  pay  them  three  per 
cent  on  their  idle  money?  Then  capitalists 
are  very  often  timid  and  prefer  low  interest 
on  government  bonds  to  considerably  higher 
on  other  security,  and  many  of  them  would 
hold  the  bonds  when  they  could  get  higher 
interest  by  loaning  their  money.  His  plan  is 
founded  upon  the  same  principles  as  mine  ex- 
cept that  his  plan  was  devised  to  keep  interest 
high,  while  mine  would  prevent  interest  from 
rising,  and  even  hoarding  money  could  not 
affect  the  rate  of  interest,  with  my  plan  in 
operation. 

His  plan  was  to  tax  the  people  to  keep 
money  idle  when  too  much  was  in  circulation, 
and  he  seems  to  have  taken  it  for  granted  that 


134  PROGRESS     AND     PLENTY 

financiers  would  not  interfere  with  the  law  of 
supply  and  demand.  While  his  plan  would 
tax  the  people  to  pay  interest  on  bonds,  mine 
would  furnish  a  large  revenue  by  supplying 
the  people  with  money  at  a  lower  rate  of  in- 
terest than  they  would  otherwise  have  to  pay. 
His  plan  would  make  it  possible  for  the  finan- 
ciers to  control  the  currency  more  completely 
than  at  present,  except  that  they  could  not  in- 
flate it  to  such  an  extent  that  interest  would 
fall  below  3%.  Then  I  do  not  think  he  had 
any  plan  for  limiting  the  amount  of  bonds  to 
be  issued.  He  would  pay  capitalists  for  put- 
ting their  money  into  the  treasury.  I  would 
make  them  pay  for  drawing  money  from  the 
treasury. 

I  can  only  see  one  reason  why  Mr.  Johnson 
could  have  proposed  such  a  plan,  and  that  is 
that  he  accepted  Mr.  George's  theory  that 
"wages  and  interest  rise  and  fall  together." 

All  reformers  who  wish  to  raise  wages  must 
have  a  clear  understanding  of  economic  laws, 
or,  like  Mr.  Johnson,  they  will  be  advocating 
measures  on  the  one  hand  that  will  raise 
wages,  and  offset  all  the  good  they  do  by  ad- 
vocating measures  that  will  raise  interest  and 
lower  wages. 

Henry  George  understood  the  law  of  dis- 
tribution as  far  as  it  affected  the  landlord  on 
one  side,  and  the  undivided  shares  of  laborer 
and  capitalist  on  the  other.  His  remedy  for 


PROGRESS     AND     PLENTY  135 

the  evils  and  injustice  of  landlordism  is  the 
best  and  most  practical  ever  offered  and  is 
gaining  steadily  in  popularity.  It  is  being 
partly  applied  in  several  countries,  and  no 
doubt  it  will  continue  to  gain  until  the  right  of 
every  man  to  the  use  of  the  earth  is  recognized 
the  world  over.  Most  Socialists  favor  the 
Single  Tax,  but  have  been  kept  from  joining 
the  Single  Taxers  by  the  false  theories  the 
latter  hold  in  regard  to  the  relations  of  labor 
and  capital.  If  I  have  been  successful  in 
pointing  out  the  true  laws  of  distribution,  and 
also  in  showing  how  the  ideals  of  the  Socialists 
can  be  realized  by  a  practical  method  that  does 
not  interfere  with  economic  law,  the  obstacles 
are  removed  that  keep  these  two  schools  of 
reformers  separate.  If  my  solution  of  the 
money  problem  is  accepted  by  the  advocates 
of  money  reform,  the  way  it  harmonizes  with 
Single  Tax  principles  should  make  it  easy  for 
money  reformers  to  accept  the  other  reforms 
I  propose.  With  the  land  and  money  prob- 
lems both  solved  there  would  be  work  at  high 
wages  for  all;  but  to  make  it  a  certainty  we 
can  substitute  work  for  all  at  a  minimum  wage 
for  charity.  Even  the  dullest  can  understand 
that  if  the  government  was  prepared  to  hire 
all  who  applied  for  work  at  a  minimum  wage 
that  the  problem  of  the  unemployed  is  solved. 
Even  if  the  minimum  wage  was  very  low  at 
first,  it  could  be  increased  as  the  increasing 


136  PROGRESS     AND     PLENTY 

prosperity,  sure  to  follow  the  adoption  of  the 
other  two  reforms,  brought  more  money  into 
the  treasury.  It  would  be  a  start  towards  the 
co-operative  commonwealth  of  the  Socialist, 
and  if  the  government  ever  proved  itself  more 
capable  than  individuals  at  managing  indus- 
try, the  co-operative  commonwealth  would 
evolve  naturally  from  that  start;  but  unless 
the  government  proved  itself  the  more  capa- 
ble, industry  would  continue  to  be  carried  on 
by  individuals. 

Now,  Reader,  do  you  approve  of  my  plan, 
and  are  you  ready  and  willing  to  help  to  carry 
it  out?  If  a  number  approve,  we  should  or- 
ganize to  carry  it  out.  I  would  like  to  hear 
from  you  anyway,  whether  you  approve  or 
not;  and  a  card  or  letter  addressed  to  the 
author  at  Fairhope,  Alabama,  will  find  me. 

THE  END. 


14  DAY  USE 

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